A cooler lean to the temperature outlook, including projections for less heat in the eastern half of the Lower 48, helped send natural gas futures a few cents lower in early trading Monday. The July Nymex contract was down 4.1 cents to $3.174/MMBtu at around 8:50 a.m. ET.

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The latest forecast from Bespoke Weather Services early Monday showed temperatures over the next two weeks trending slightly cooler compared to previous expectations.

“The best heat in the pattern remains in the western half of the nation, with models not showing as much risk for the return of eastern heat as they were hinting at last week,” Bespoke said. “Given the lack of eastern ridging showing up in current projections, the risk is that total” gas-weighted degree days “may be forecast a little too high as we reach early July and could wind up closer to normal than currently indicated.”

Along with the cooler weather outlook, Bespoke pointed to data showing Lower 48 production rising above 92.5 Bcf/d over the weekend to help explain the selling early Monday. Power burns also appeared somewhat weaker on a weather-adjusted basis, according to the firm.

“We suspect price action remains rather choppy, with risk perhaps skewed a bit lower toward the $3.10-3.15 range, though we find it difficult to build the case for a deeper pullback than that, barring additional bearish moves in the data,” Bespoke said.

According to analysts at EBW Analytics Group, how the forecast plays out for temperatures during the first week or so of July could “heavily” influence the direction of prices this week, as could a potential increase in liquefied natural gas feed gas flows.

“Heading into the July Fourth holiday, the market often gives the early July forecast more weight than it deserves, treating it as a sign of what the rest of summer holds,” the EBW analysts said. 

Meanwhile, according to ICAP Technical Analysis, the burden still falls to the bears to “signal a top is in place” by taking out support between $3.081 and $3.037.

“Looking for a seasonal retreat to take hold should the bears succeed,” ICAP analyst Brian LaRose said in a note to clients. “Watching to see if the bulls are able to take advantage of any failure on the part of the bears otherwise. Still targeting the $3.500 vicinity next if $3.396 is breached.”

July crude oil futures were down 18 cents to $71.46/bbl at around 8:50 a.m. ET, while July RBOB gasoline was off about 1.7 cents to $2.1517/gal.