In the aftermath of last week’s heavy sell-off, natural gas futures were trading lower early Tuesday as forecasts shed cooling demand over the weekend. The August Nymex contract was off 35.5 cents to $5.375/MMBtu as of around 8:45 a.m. ET.

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The outlook for the natural gas market was “surprisingly stable” over the extended Fourth of July holiday weekend as strength in liquefied natural gas feed gas demand helped counter “minimal bearish weather shifts,” EBW Analytics Group Senior analyst Eli Rubin told clients early Tuesday.

Strong cooling demand this week could provide support for prices in the physical market in the near-term, Rubin noted. 

“The locus of heat shifting westward and northward, however, appears to have lessened cooling demand risks for mid-to-late July,” Rubin said.

Weather models eased lower on cooling demand expectations over the holiday weekend but continued to advertise strong heat through the first half of the month, according to NatGasWeather.

The American and European models “both remain plenty hot enough most days through July 15-16 as highs of 90s to 100s rule most of the southern two-thirds of the U.S.,” the firm said. “The pattern is neutral or closer to seasonal July 16-19 as the hot ridge weakens slightly and shifts over the west-central U.S., while at the same time weather systems with showers and comfortable temperatures are favored across the Great Lakes, Ohio Valley and Northeast for near-normal national demand.”

The weekend weather trends offered a possible reason for prices to enter the new trading week lower, even though “oversold conditions could warrant a bounce” in the wake of “last week’s massive plunge,” NatGasWeather added.

Over the next seven to 10 days, price action could be dictated by “trader repositioning” following the sharp drop in prices last week, and an eventual test of the 200-day moving average at $5.26 is “probable,” according to EBW’s Rubin.

“Although the bulk of fundamental price risks remain asymmetrically tilted to the high side later this year, however, it may require a bullish catalyst first to reverse growing bearish momentum,” Rubin said.