With conditions seen favoring robust cooling demand heading into the summer, natural gas futures climbed in early trading Monday. The June Nymex contract was up 16.9 cents to $7.832/MMBtu at around 8:40 a.m. ET. July was up 17.2 cents to $7.937.

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Strong power generation demand recently, driven by heat in the southern Lower 48 and lower wind generation over the weekend, was supporting higher prices heading into Monday’s session, according to Bespoke Weather Services.

“Production is a little higher, though not quite back to year-to-date highs,” Bespoke said. “Canadian imports are down a little since Friday…Given the strength in power burns we are seeing, we still feel the risk to prices is skewed to the upside, and our lean is that we probably have not seen the highs in prices for the year.”

Estimates suggest domestic dry gas production “stumbled” over the weekend, EBW Analytics Group senior analyst Eli Rubin said.

However, “pipeline maintenance makes it difficult to discern the signal from the noise,” Rubin said. The Energy Information Administration’s upcoming Drilling Productivity Report “may again project rising output — helping to further take the edge off” for a market that has been volatile in recent weeks.

“The current period of calm, however, is no indication that the long-term bullish outlook or the conditions behind recent price volatility have materially changed,” Rubin added.

As for the weather outlook, the 15-day forecast period shed projected demand by trending cooler over the weekend, according to Bespoke.

“The shift was seen in the Midwest, East, as well as the South,” the firm said. “While the change is in the bearish direction, demand-wise, there are already signs that stronger heat may return at the very end of the month into early June, something we have been expecting to show up based on the pattern signals we have.”

As a whole, gas-weighted degree days leaned above-normal for the 15-day period, and this is “likely the base state we will have for the summer,” Bespoke added. The “persistence of La Niña” suggests temperatures will be “skewed hotter than normal.” 

Meanwhile, looking out to the July contract, from a technical perspective “nothing changes structurally,” ICAP Technical Analysis analyst Brian LaRose told clients in a recent note.

“To confirm the recent $6.521 low marked the end of a bull market correction, bulls need to lift July over the retracements associated with the $9.052 high,” LaRose said. 

The analyst also pegged the $9.052 level as a key target for bulls.

“So long as the July contract remains below $9.052, more congestion, even a break beneath the $6.521 low, is possible near term,” LaRose said.