June natural gas is set to open 3 cents higher Tuesday morning at $3.20 as near-term weather forecasts calls for greater energy demand, yet traders ultimately see weaker prices. Overnight oil markets were mixed.

Overnight weather models came in cooler. In its morning report to clients WSI Corp. said, “[Tuesday’s] six-10 day period forecast is cooler than yesterday’s forecast across the northern states and warmer over the southern states during the majority of the period. CONUS GWHDDs are up 2.6 to 25.6. PWCDDs are up 1.1 to 15.6.

“The track and progression of low pressure near the East Coast and over the western U.S. could cause the forecast swing in either direction. A slower progression like the ECMWF offers a cooler risk over the East.”

Estimates of heating load near term are coming in greater than normal. The National Weather Service (NWS) forecast above-normal accumulations of heating degree days (HDD) across major energy markets for the week ending May 13. NWS said New England would see 88 HDDs, or 12 more than normal, and New York, New Jersey and Pennsylvania would have 86 HDDs, or 26 more than the normal seasonal tally. The greater Midwest from Ohio to Wisconsin was anticipated experience 78 HDDs, or 13 more than normal.

Analysts see other fundamental factors largely offsetting each other without a significant impact on storage. “In the absence of significant weather guidance, the market is forced to rely on significant shifts from non-weather items such as production, power demand and exports,” said Jim Ritterbusch of Ritterbusch and Associates in a morning report to clients.

“But here also, offsets are being seen and significant adjustments to month-end storage levels are not being required. A reduction from the 303 Bcf storage surplus of around 20 Bcf has likely been priced in, and an outlier such as a build of less than 45 Bcf or greater than 60 Bcf will likely be required to spark a price move much larger than 6-7 cents. Meanwhile, the physical trade is looking heavy with Henry Hub drifting lower back toward the $3 area. These discounts against the nearby screen are contributing to an expanded front June-July switch into new wide territory of almost 9 cents. This is a bearish portent, in our opinion, that is reinforcing our forecasts for an ultimate price decline to the $3.05 area.

In overnight Globex trading June crude oil dropped 7 cents to $46.36/bbl and June RBOB gasoline rose fractionally to $1.5183/gal.