Nymex July natural gas prices were set to open nearly 4 cents lower at $2.892 Friday morning as overnight weather forecasts cooled dramatically for the June 15-18 time period.

The European model showed the most significant changes in the medium range, with a cool shot from the Midwest into the Ohio River Valley and East looking to pull cooling demand around to slightly below average during that time, even as some heat may be able to linger across the South. From there, models do gradually show heat returning to the South and East, although a weak trough should keep temperatures around to slightly below average across the Midwest, Bespoke Weather Services said.

“There are still signs that this pattern will gradually break down as we move into the end of June,” as a weather system should allow heat to return to the East and most models are consistent in returning cooling demand above average beyond June 20. Week 3 forecasts still have a more cool risks, with at least some guidance at risk of cooling further before long-range heat is seen.

The cooler weather outlook “should be enough to keep prices under pressure today, and any bounce to $2.92 or higher is likely to be quickly sold,” Bespoke chief meteorologist Jacob Meisel said. “The strip appears only modestly supportive following these broad demand losses, and generally, we see risk for another $2.87 support test ahead of the weekend.”

EBW Analytics’ Andy Weissman agreed, saying with projected demand again trending

a hair lower and Thursday’s explosion no longer a major factor, a re-test of support at

$2.86-2.88/MMBtu is likely soon.

The key question is whether this support can break, Meisel said, and “we would likely need to see afternoon model guidance confirm overnight guidance for that to be the case.” Regardless, Bespoke expects support to be tested, and risk today certainly remains to the downside.

Following Thursday’s pipeline explosion on Columbia Gas Transmission’s (TCO) Leach Xpress and with recent production declines, however, the market may see the impacts of looser burns and gas-weighted degree day losses muted. Cash prices have similarly remained strong, so although bounces fail, support may be able to hold for now.

Genscape Inc. said evening nominations through LXPSEG were 250 MMcf/d on June 7 and then dropped to zero for Friday. The LXPSEG location is representative of new pipe flows and reroutes, and has been flowing at or slightly above the operational capacity of 1.5 Bcf/d

through May.

Two locations (Stagecoach and Gibraltar) represent new TCO production and feed Leach

Xpress. Since May 1, nominations have averaged ~260MMcf/d at Stagecoach-LXP and ~220 MMcf/d at Gibraltar III, although both have been netted to 0 MMcf/d as of June 8, Genscape said. Gibraltar III has a reroute option through Nisource Midstream on Texas Eastern Transmission (Tetco), which increased nominations by over 300 MMcf/d, to 332 MMcf/d on June 8 from 10 MMcf/d on June 6.

Majorsville LXP and Eureka also feed LXPSEG through rerouted production, according to Genscape’s Vanessa Witte. Both were netted to 0 MMcf/d as of June 8, from prior averages of 410 MMcf/d and 280 MMcf/d, respectively.

“The Majorsville plant didn’t miss a beat, as the loss from TCO was made up fully with additional receipts to Tetco. However, overall production on Eureka’s gathering system fell 325 MMcf/d from June 6-7, with an additional decrease of 82 MMcf/d on June 8, which brought overall

production to ~650 MMcf/d as of today,” Witte said.

Meanwhile, the market appears to be brushing off the latest storage report from the Energy Information Administration, which reported an on-target 92 Bcf build into storage that lifted inventories to 1,817 Bcf, nearly 800 Bcf below year-ago levels. The reported build “was once again indicative of a net supply/demand balance far less bearish than the production growth-only perspective put forth by many market pundits,” Mobius Risk Group said.

July crude oil futures were set to open Friday morning about 23 cents lower at $65.72/bbl, while July RBOB gasoline was trading nearly flat at $2.12/gal.