June natural gas is expected to open 3 cents higher Wednesday morning at $2.11 as traders discount the idea of an overextended market. Overnight oil markets gained.

A leading consulting firm, however, sees the weak settlement of the May contract as evidence the market may have gotten ahead of itself.

“Despite growing bullish sentiment, the market deemed it too soon for $2-plus/MMBtu gas as per the final settlement price for the May futures contract,” said PIRA Energy in a report. “The related tepid May contract termination underscores concerns regarding the timing of supply rebalancing.

“With the June contract now in the ‘pole position,’ traders will be more focused on weather and related demand prospects this summer. Yet, Henry Hub cash will still remain susceptible to renewed weakness due to building storage congestion — at least for the next few weeks. Such a backdrop would require supply to be pushed (or kept) out of the region, thus requiring [Midwest] basis premiums.

“Meanwhile, the more acute price weakness in western Canada is being “exported” into the West — especially when demand is weak — as highlighted by the depths prices at Sumas reached this month.”

Weather forecasters see a slight increase in heating and cooling load this week, but going forward requirements are expected to lag longer-term averages. “For each day this week so far, we have recorded slight increases in national demand forecasts (single-digit total degree day advances), but we continue to track next week and the week after below the 10-year normal and last year’s levels,” said Commodity Weather Group in its morning report.

“This current week is managing to edge out higher than both benchmarks, though. Indeed, we see additional cooler short-range changes for the East Coast that are adding some last-minute heating degree days to the forecast,” said Matt Rogers, president of the firm.

In the very near term, the National Weather Service (NWS) forecasts below-normal heating and cooling demand in major population centers. For the week ending May 7, NWS predicts that New England will see combined heating and cooling degree-days (DD) of 84, or seven fewer than normal. The Mid-Atlantic should enjoy 68 DD, or five fewer than normal, and the greater Midwest from Ohio to Wisconsin is anticipated to experience 69 DD, or 11 below it seasonal tally.

Tom Saal, vice president at FCStone Latin America LLC in Miami, in his work with Market Profile expects the market to test Tuesday’s value area at $2.092 to $2.072. At that point he recommends following the course of prices should they break outside the initial balance, higher than $2.119, and lower than $2.033. “Eventually” he expects the market to test $2.281 to $2.225.

“One of the best features of Market Profile is the display of both the vertical and horizontal price dimensions. Note last four days of horizontal trading [and] look for change away from the horizontal — untested value area at $2.225,” he said in a morning note to clients.

In overnight Globex trading June crude oil rose 34 cents to $43.99/bbl and June RBOB gasoline added 2 cents to $1.5287/gal.