A sharp drop in cooling demand expectations from forecasts over the weekend had natural gas futures tumbling in early trading Monday. The June Nymex contract was down 6.8 cents to $2.838/MMBtu at around 8:50 a.m. ET.

NGI Morning Natural Gas Price & Markets Coverage

Weather models over the weekend “abruptly shifted much cooler” by lowering cooling demand expectations for the eastern half of the Lower 48 starting this weekend into early next week, according to Bespoke Weather Services.

Both the American and European weather models “now drop a cooler trough” that would result in “below normal temperatures showing up in the Midwest and East,” the firm said. “This cooler period is sandwiched between the heat coming later this week, which now peaks Thursday into Friday…and some above normal heat as we move to and beyond June 5, though the strongest heat in that period is actually out in the West.”

As a result of the “drastic cooler change” in the forecast, two of the next three Energy Information Administration (EIA) storage reports are now likely to show triple-digit injections, according to Bespoke.

“It is not just the weather that moved in the bearish direction, either,” Bespoke said.

The firm pointed to daily data points showing production closing in on 91 Bcf/d, on the higher end of the range of output levels observed over the last several months. While liquefied natural gas export demand “remains strong,” power burns “still look weak” on a weather-adjusted basis.

“Given that the forecast…still has some heat this week” and shows more hotter temperatures arriving after cooling next week, Bespoke said it is “not convinced of massive downside risks ahead, but can see a continued slide down to the $2.80 level.”

After losing ground for much of last week’s trading, the weekend changes to the weather outlook create the potential for the June contract to slide even further heading into expiration later this week, according to analysts at EBW Analytics Group.

Heading into Memorial Day weekend total cooling degree days nationally are now “forecast to sink sharply,” the firm noted. “With non-weather-related demand also expected to drop heading into the holiday, the June contract is likely to shed several more cents before it goes off the board Wednesday.”

Looking ahead to Thursday’s EIA report, NGI’s model is calling for a 107 Bcf injection for the week ended May 21. That would fall roughly in line with the 105 Bcf injection recorded for the year ago period. The five-year average is a build of 91 Bcf.

July crude oil futures were up 88 cents to $64.46/bbl at around 8:50 a.m. ET, while June RBOB gasoline was up about 3.1 cents to $2.0998/gal.