July natural gas is set to open 4 cents higher Wednesday morning at $4.75 even though observers are looking for an uneventful session as traders adjust accounts ahead of Thursday’s gas storage report. Overnight oil markets rose.

Tim Evans of Citi Futures Perspective is looking for another quiet day as traders square books ahead of Thursday’s EIA storage report. “The consensus view is still coming into focus, but estimates we’ve seen so far suggest expectations are centering somewhere in the 107-110 Bcf range, a bit below our model’s 112 Bcf forecast but still bearish compared to the 87 Bcf five-year average for the week ended June 13.”

Evans sees warmer temperatures “adding in some air conditioning demand that will limit storage injections in the next two weeks. While not as bearish as the prior scenario, our storage forecast still features a declining storage deficit. This confirms that supplies are becoming easier on a seasonally adjusted basis, which is most often bearish for prices over the intermediate term.

“We can’t rule out a rally attempt like the one last week on the basis that storage levels are still not making enough progress in returning to more comfortable levels, but even this argument should be losing traction as the deficit shrinks.”

PJM power generators can look for a combination of heat and humidity along with thunderstorm activity in the near term. WSI Corp., in its morning outlook, said to expect “hot and humid conditions in combination with a cold front lead[ing] to the increasing chance and coverage of scattered shower and thunderstorm activity during the next couple of days. Severe weather is possible. This front will wash out and interact with another disturbance during the end of the week into the weekend, which will continue to support the chance of scattered showers and storms. The combination of this front and unsettled wet weather should scale back the scope of the heat and humidity.

“Highs [Wednesday] may generally range in the upper 80s and 90s. Dewpoints in the 60s may allow for heat indices well into the 90s to near 100 in spots. A cold front and its associated wet weather should act to scale back the magnitude and scope of this heat and humidity during the end of the week into the weekend. Highs may generally retreat into the 80s to low 90s.”

Variable wind generation is forecast. “A warm south-southwest wind should continue to promote elevated wind generation [Wednesday] into tonight. Output may range near 2 GW at times, [but] wind generation is expected to relax and become more variable during the end of the week into the weekend. The recent and expected wet weather will support increasing stream flow and favorable hydro generation potential. Variable cloud cover may gradually scale back solar generation prospects during the next few days.”

Tom Saal, vice president at INTL FC Stone in Miami, in his work with Market Profile says to look for the market to test Tuesday’s value area at $4.718 to $4.694. He notes that the week’s initial balance runs from $4.778 to $4.669 and Market Profile methodology calls for traders to buy or sell as prices break out of the initial balance. Should futures break higher than $4.778, Saal places trading targets at $4.833 and $4.887. A fall below $4.669 would place $4.615 and $4.560 in the trading cross-hairs. Mode Market Profile support comes in at $4.612.

In overnight Globex trading July crude oil added 26 cents to $106.62/bbl and July RBOB gasoline rose a half cent to $3.0972/gal.