July natural gas is expected to open a penny higher Monday morning at $2.65 as traders and risk managers mull a missed opportunity and assess trading strategy for the week. Overnight oil markets eased.

For the week, July futures lost nearly 28 cents, and risk managers were hoping that strength early in the week would provide a hedging opportunity. “With this week’s selloff, the gas market gave back most of the gains over the past month,” said Mike DeVooght, president of Colorado-based DEVO Capital Management.

“On a trade basis, we were looking for an opportunity to get short in the front [months] at $3.20 and the backs in the $3.50-3.60 range. We did get close, but unfortunately we did not reach our sell levels. At this time, we will stand aside and await future developments.”

Those future developments just might include an opportunity to re-enter those short hedges. Tom Saal, vice president at FC Stone Latin America LLC in Miami, in his work with Market Profile said, “Although last week’s expiration and subsequent selloff reflected shoulder month weakness, Market Profile shows upside potential with two untested [value areas].”

Saal identifies two areas of interest on the weekly July Market Profile: last week’s value area at $2.883-2.729 and a second value area at $3.082-2.986.

Those versed in Elliott Wave and retracement analysis take a somewhat different tack. “On the ascent from the $2.443 low the $3.102 level was a very important candidate for resistance as the “a” = “c” objective,” said Walter Zimmermann of United ICAP in a weekly report to clients. “I surmised that a peak there would be a candidate for the seasonal spring peak. Now the case for a larger advance is at risk. If natgas fails to ricochet higher by the $2.540 level then a drop to the $1.880 area becomes possible.”

Heating and cooling requirements for the week ended June 6 do not look like potential market drivers if National Weather Service (NWS) forecasts of heating and cooling requirements in major market centers are correct. NWS predicts a combined total of 45 DD (degree days) or 11 more normal for New England, but New York, New Jersey and Pennsylvania are expected to see just 27 DD or eight below normal. The greater Midwest from Ohio to Wisconsin is forecast to experience 42 DD or six below normal.

In overnight Globex trading July crude oil fell 25 cents to $60.05/bbl and July RBOB gasoline eased a penny to $2.0487/gal.