September natural gas is set to open 3 cents lower Wednesday morning at $3.79 as modest changes in the near-term weather outlook are unable to lift prices. Overnight oil markets gained.

According to one analyst Tuesday’s late-session expiration rally was prompted by short-covering and also “by a warmer temperature forecast that looks like more than enough to to offset a shift in expectations for Thursday’s DOE storage report for the week ended July 25 from roughly 90 Bcf to closer to 95 Bcf. The five-year average storage refill for the date is 45 Bcf,” said Tim Evans of Citi Futures Perspective.

“Warmer temperatures in the weeks ahead will boost air conditioning needs, with the higher power loads met by burning natural gas, limiting the volumes available to flow into storage.” Evans predicts a build of 89 Bcf for Thursday’s storage report, and if his forecasts are correct, the year-on-five-year deficit will shrink from it’s present 683 Bcf to 518 Bcf by Aug. 15.

“While the bearish storage trend remains open-ended, and could continue even beyond the end of the storage injection season, we also expect the market to encounter support sometime soon as it should maintain some premium to last year’s price level based on the remaining deficit, in our view. There may also be a shift in seasonal focus, with the market focusing more and more on end-of-season storage levels and the prospects for winter.”

Overnight weather forecasts did warm slightly. In its Wednesday morning outlook, WSI Corp. said, “The latest six-10 day period forecast is not quite as cool as past forecasts across portions of the central and eastern U.S. on a day-to-day basis, though this is offset by the period shift. The West is a bit cooler; confidence in the forecast is considered average based on rather good model agreement with the general relaxation or moderation of the large-scale pattern. Models have come into better agreement with regards to tropical impacts. Risks to the forecast include upside risk across the southern and eastern U.S., as well as the Northwest at least early in the period.”

The National Hurricane Center in its 8 a.m. EDT report said that the tropical disturbance 1,150 miles east of the Windward Islands could make it to Tropical Storm status, but the likelihood remained constant at a 70% chance in the succeeding 48 hours.

In overnight Globex trading, September crude oil added 51 cents to $101.48/bbl and September RBOB gasoline rose a half cent to $2.8486/gal.