August natural gas is expected to open 5 cents higher Tuesday morning at $2.87 as traders study forecasts calling for increased warmth and mull options trading strategies. Overnight oil market were mixed.

Weather forecasts came in slightly warmer overnight. “[Tuesday’s] forecast has trended slightly warmer across the East when compared to Friday, gaining two PWCDDs,” said WSI Corp. in its morning six- to 10-day outlook. “Forecast confidence is considered near to slightly above average standards due to reasonably good large-scale model agreement.”

Market technicians see the market needing to trade about a dime higher before any kind of bullish scenario can come into play.

“While the bulls were unable to find their footing Monday, they have another opportunity to do so Tuesday, thanks to the potential doji star bottom on the daily candlestick chart,” said Brian LaRose, a market technician with United ICAP, in closing comments Monday. “But bulls will need more than the usual rally to confirm this bottoming pattern. In this case, we would like to see the $2.934 high exceeded. [We] have no reason to get behind the bulls otherwise.”

Analysts see the temperature factor losing ground to production as the August contract expires. “[Monday’s] modest losses are quickly being negated in the overnight trade with this ‘zig-zag’ type price activity likely to continue through month’s end,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. “At the present time, the temperature factor looks price-supportive beyond this week’s normal trends as most forecasters are seeing hotter and broader based patterns next week than was the case at the start of this week. But some significant moderation is expected across a major portion of the Midcontinent by later next week and well into the first week of August.

“With the rollover to the September contract as prompt month next week, the temperature factor should begin to diminish in importance with more attention likely to be placed on the supply side of the equation. But while some leveling in production with year-over-year gains seeing reduction going forward will be acting as a minor supportive force, it is unlikely to spur much price strength unless accompanied by a major storm event that cuts [Gulf of Mexico] output appreciably.

“Otherwise, we see a market trapped for now in which a position-type trading opportunity in excess of some 20-25 cents will likely remain elusive. But identifying a range-bound market in which sideways price action is a strong probability can also be advantageous in offering opportunities within the options market with an effort toward capturing premium within various straddle-type strategies.”

In overnight Globex trading August crude oil rose 11 cents to $50.26/bbl and August RBOB gasoline gave up a penny to $1.9166/gal.