July natural gas futures were set to open fractionally lower at $2.924 Tuesday as Monday’s hints of cooler weather by the third week of the month continued to show up in overnight weather model runs.

Short-term and long-term forecasts both cooled slightly, though medium-term warming trends were enough to overcome that outlooks turned a bit less cool around June 11 and 12, according to forecasters at Bespoke Weather Services. Still, the overall theme has continued to be decently cooler weather arriving by the second half of June that could have some staying power and pull cooling demand back to around or slightly below average.

That bearish sentiment is likely to be a central focus on Tuesday, with risks that weather guidance begins losing additional gas-weighted degree days (GWDD) as it focuses on cool risks later on in June. Meanwhile, the cooler risks also have “solidly raised” Bespoke’s storage injection expectations over the next several weeks, chief meteorologist Jacob Meisel said.

Early indications point to another sub-100 Bcf injection for this week’s Energy Information Administration (EIA) report, for the week ending June 1. The next two weeks’ injections are now predicted by traders on the Intercontinental Exchange to be 94 Bcf and 83 Bcf, respectively. Taken together, this would still be supportive of around 2 Bcf/d of demand growth year/year, Mobius Risk Group said.

“All of the injections so far this year have implied demand growth of between 1 Bcf/d and 3 Bcf/d, with an average of about 2.25 Bcf/d. Continued implied year-on-year demand growth in excess of 1 Bcf/d throughout this summer could result in an end-of-October inventory level of less than 3,400 Bcf, which may not provide enough safety margin for a colder-than-normal winter,” Mobius said.

And while production growth appears to be taking center stage for market bears, Mobius said that if production grows by an additional 1.75 Bcf/d from now until the end of October, and if total demand shows year/year growth of just 1 Bcf/d, that would still result in an end-of-October inventory level of around 3,400 Bcf.

If demand growth turns out to be closer to what recent EIA storage reports have implied (2 Bcf/d of growth), then end-of-October inventory levels could fall below 3,300 Bcf, “which should be supportive of higher prices heading into the winter months,” Mobius said.

On the other hand, greater-than-expected production growth and mild summer temperatures could send prices lower, but shouldn’t create “containment pricing” in late October and early November (i.e., October and November cash trading significantly below summer 2019), since inventory levels are not projected to exceed 3,700 Bcf even in the mildest of weather scenarios.

As for Tuesday’s trading action, Bespoke’s sentiment has ticked slightly less bearish as prices have approached its first high confidence support range from $2.87-2.90, “especially with minor GWDD additions and production that is not continuing to set record highs.” With liquefied natural gas exports expected to return and production growth not as significant, Meisel said the market may not see $2.87-2.90 break until there is further evidence of loosening or additional GWDD losses.

Current long-range weather forecasts, however, are far from bullish, indicating “any bounce back into the $2.95-2.97 range is likely to fail, and risk remains more steadily to the downside this week, especially with a couple bearish EIA prints likely. Support may be broken on any cooler trends as well,” Bespoke said.

July crude oil was set to open about 34 cents lower at around $64.41/bbl, while July RBOB gasoline was trading about 3 cents lower at around $2.0928/gal.