As the latest weather data continued to show strong heat for much of the country through the first half of July, natural gas futures continued higher in early trading Tuesday. The August Nymex contract was up 4.1 cents to $1.750/MMBtu at around 8:45 a.m. ET.

Both the American and European models advertised hotter trends overnight, according to NatGasWeather. The European remains “solidly bullish for the first half of July” after adding four cooling degree days to its outlook overnight, the forecaster said.

“The focus remains on how long this hot/bullish U.S. pattern lasts, and we continue to expect through at least mid-July,” NatGasWeather said. “With upper high pressure expected to expand to dominate most of the country besides the northwest and northeast corners the next two weeks, highs of upper 80s to 100s will be widespread.

“This should surge national power burns into the 40s Bcf/d while providing the first test to see if all-time highs will be met or exceeded this summer.”

Between liquefied natural gas (LNG) export cancellations and the demand impacts of the Covid-19 pandemic, the market may need to lean on power burns to try to tighten the market, according to Energy Aspects.

Last week output from gas generators “approached levels seen only on a handful of days last July and August — a glimpse of what could be ahead on warmer-than-normal days this summer,” Energy Aspects said. “The higher gas burn intensity year/year needs to occur to mop up excess supplies due to continued LNG cargo rejections and still-recovering industrial and overall power demand.”

The early gains Tuesday followed a surging 16.5-cent rally in Monday’s session.

Analysts at EBW Analytics Group attributed the gains to traders believing that, following last week’s lows, upcoming summer heat would lead to rebounding prices.

“This belief became a self-fulfilling prophecy yesterday, with the August contract jumping more than 10% in a single session,” the EBW analysts said. “Whether these gains can be sustained, however, is a different question. The August contract could continue to probe higher this morning. LNG feed gas flows later this week, however, remain a major risk factor.”

This week’s Energy Information Administration storage report and potential weakness in cash prices heading into the holiday weekend also present potential downside risks, according to the EBW team.

“We’d be inclined to wait until Thursday morning or Friday afternoon before initiating new long positions,” they said.

August crude oil futures were off 70 cents to $39.00/bbl at around 8:45 a.m. ET, while July RBOB gasoline was down fractionally to $1.1831/gal.