July natural gas is set to open 2 cents higher Wednesday morning as traders balance the end of 100-plus Bcf builds in Thursday’s government storage report with weather forecasts showing a cool trend in the nation’s mid-section. Overnight oil markets were mixed.

Traders said there may be more to Tuesday’s gains than meets the eye. Tim Evans of Citi Futures Perspective noted that options expire Wednesday “with the underlying futures contract to expire on Thursday, and so there may well have been an element of book-squaring behind the price recovery.”

Evans said current estimates of Thursday’s storage injection in the vicinity of 100 Bcf “would clearly be bearish relative to the 82 Bcf five-year average for the date. However, given our model’s lower 93 Bcf estimate, we also see some risk of a smaller injection that would constitute a bullish surprise,” he said in closing comments Tuesday to clients.

Going forward, Evans calculates sub-100 Bcf injections through mid-July. For the week of June 27 he predicts a fill of 96 Bcf, followed by builds of 77 Bcf and 87 Bcf. By July 11, the year-on-five-year deficit is thinned to 785 Bcf from its current 851 Bcf, he said.

A lower deficit notwithstanding, Evans admits that “this may not be enough to prevent the occasional rally or even a more significant advance on the basis that progress in reducing the deficit is still not enough, although even the declining deficit should still mean that the upside potential is gradually being reduced.”

Evans is short the market. He recommends holding a short August futures position established at $4.62 on June 19 with a protective stop at $4.67 to reduce exposure on the trade.

WeatherBELL Analytics in its Wednesday morning 20-day forecast shows cooler than normal temperatures migrating south through the nation’s mid-section through day 10. Meteorologist Joe Bastardi sees “a new cool shot down the Plains next week.” He calls it an “overall back-and-forth pattern…biased warmer than average West of the Rockies and east of the Appalachians. The upcoming eastern shot of hot [weather] should bring 95 degree-plus to [Washington, DC] for a couple of days and it may hit 90 degrees in [New York City]. The Ensembles are falling short at Chicago.”

WeatherBELL sees cooling requirements out to day 15 nationally in line with seasonal averages; 152.2 cooling degree days (CDD) are predicted, well short of last year’s 181.4 CDD but right in line with a 30-year average of 153.1.

In overnight Globex trading, August crude oil added 29 cents to $106.32/bbl and August RBOB gasoline fell 2 cents to $3.0748/gal.