Continued expectations for widespread sweltering temperatures based on the latest forecasts had natural gas futures surging higher in early trading Monday, extending gains from late last week. After posting a 41.6-cent gain in Friday’s session, the August Nymex contract was up 23.4 cents to $7.250/MMBtu as of around 8:50 a.m. ET.

NGI Morning Natural Gas Price & Markets Coverage

Major weather models over the weekend moderated slightly in terms of total cooling degree days (CDD) but continued to advertise an “exceptionally hot” 15-day outlook, according to NatGasWeather. 

Even after easing back on projected heat, the latest model runs showed “the greatest number of CDD over a two-week period of the past four decades,” according to the firm. 

The pattern for this week through July 30 “remains impressively hot as unseasonably strong/hot upper high pressure rules most of the U.S. with highs of 90s and 100s besides the far northern U.S., where highs will often stay in the 80s and where the weekend weather data was slightly cooler trending,” NatGasWeather said. “Longer range weather maps for early August continue to favor hotter than normal temperatures over most of the U.S. for what would keepw weather sentiment solidly bullish if it were to hold, which is our expectations.”

EBW Analytics Group senior analyst Eli Rubin pointed to the “scorching heat” alongside “ill-defined technical resistance” and “price-inelastic fundamentals” as factors driving the potential for “steep” price gains near-term.

“Searing heat is the main driver of the move higher,” Rubin said. “The biggest risk to a weather-driven gas rally is a forecast bust, slashing both support and prices.”

Continued strong heat in the forecasts could set the table for $8.00 gas ahead of the August contract expiration, according to the analyst.

In terms of the supply outlook, Rubin pointed to estimates showing a 1.0 Bcf/d increase in domestic dry gas production over the weekend.

“If supply continues to increase, it could adjust the long-term storage outlook and severely slash shortage risk premiums for later this year,” Rubin said.

From a technical standpoint, ICAP Technical Analysis posed the possibility that recent gains could either be “the start of something more bullish” or potentially a “bull trap.”

ICAP analyst Brian LaRose pointed to “the ratio retracements associated with the $9.664 high” as holding the answer. These key technical levels include the .500 retracement at $7.495, the .618 retracement at $8.007 and the .7862 retracement at $8.735, according to the analyst.