June natural gas is set to open 3 cents higher Monday morning at $3.31 as traders digest significantly cooler temperatures predicted for Northeast and Midwest energy markets. Overnight oil markets receded.

In its morning six- to 10-day outlook MDA Weather Services said, “The forecast sees modest change in the cooler direction across the Eastern Half when compared to both Friday and Sunday’s reports. This comes as a result of a stronger ridge over the northern Atlantic, a feature which blocks the progression of a trough out of the East. As a result, below-normal temperatures are favored from the Great Lakes points east, including a few days with much below normal readings within this region.

“Belows are also seen in the Southwest from mid to late period, while aboves are limited in the period composite to the Rockies. Confidence remains at just moderate levels.”

Risk managers see the next market driver as the arrival of cooling season demand, but nonetheless see the market overextended at current levels.

“The gas market continues to trade in a choppy two-sided range as market participants bide their time awaiting the cooling season demand,” said Mike DeVooght, president of DEVO Capital Management. “The weekly gas storage numbers came in slightly higher than anticipated.

“On a trading basis, we still continue to look for the market to run out of steam at current levels. We think there is a good chance that we could test the lows of late February [$2.52] in the next few months. We will hold current short positions for producers and will look at rallies to the $3.40-3.50 range for the balance of the year as a selling opportunity.”

Market technicians see little change in the rangebound nature of trading. “No change,” said Brian LaRose, a market analyst with United ICAP. “To confirm the seasonal uptrend is intact and another round of higher highs is on tap, bulls must push natgas through both $3.347-3.358 and $3.422-3.432. Succeed and we can begin targeting higher prices. On the other hand, if the bears can prevent natgas from making new highs, we will need to entertain a season top. For now we are forced to wait for more info.”

In overnight Globex trading June crude oil dropped 22 cents to $49.11/bbl and June RBOB gasoline fell fractionally to $1.5436/gal.