August natural gas is set to open a penny higher Wednesday morning at $4.21 as traders sift through the aftermath of Monday and Tuesday’s selling and try to balance a continued onslaught of bearish fundamentals with what some call an “exhausted” market. Overnight oil markets fell.

Analysts suggest that the market may have recovered from Monday and Tuesday’s selling, but that is not indicative of any fundamental market change. “The natural gas market extended its slide on Tuesday, with the August contract flushing down to a $4.129 low before recovering to a $4.204/MMBtu settlement, down 2.1 cents (0.5%) on the day,” said Tim Evans of Citi Futures Perspective in closing comments Tuesday.

“The rebound from the lows suggests the market may have exhausted or that enough bargain hunting emerged to put a floor back under the market for at least now.

“While the market may well be probing price levels that represent value, the fundamentals have been weakened further, with weather forecasts turning cooler, particularly for the central U.S. This will reduce air conditioning loads and power sector demand for natural gas in turn, allowing somewhat more natural gas production to report to storage.”

Joe Bastardi of WeatherBELL Analytics sees a “major cool outbreak…centered over the nation’s heartland” in the firm’s Wednesday morning 20-day forecast. He adds that “moderation occurs after, but a trough holds over the Ohio Valley. High confidence in cool forecast [and] CFSv2 [NOAA Climate Forecast System version 2] says kiss the rest of summer (through August) goodbye as far as large-scale sustained heat. Texas is back and forth, but a strong cool shot makes it there next week too, along with East Coast.”

WeatherBELL calculates for the next 15 days a national accumulation of 150 cooling degree days (CDD), well short of last year’s 194.6 CDD and also below the 30-year average of 172.3.

Evans forecasts a storage build for the week ended July 4 of 88 Bcf and sees the trend of diminishing storage deficits continuing. By July 25 the year-on-five-year deficit contracts from its current 790 Bcf of 673 Bcf.

Other estimates of Thursday’s storage report include those from IAF Advisors and Stephen Smith Energy both at 90 Bcf.

The recent Short Term Energy Outlook gives some clues to the recent price slide. “U.S. dry gas production was 3.01 Bcf/d (4.5%) higher than a year ago, while demand was little changed, with industrial production up 0.63 Bcf/d (3.3%), but power sector consumption 0.66 Bcf/d (2.7%) year over year. It looks as though it’s going to take more extreme weather than what we’ve seen so far this summer in order to produce a below-average storage refill,” said Evans.

In overnight Globex trading August crude oil fell 22 cents to $103.18/bbl and August RBOB gasoline shed a penny and a half to $2.9571/gal.