July natural gas is set to open a penny higher Tuesday morning at $3.04 as traders note consistently warm temperature forecasts and a new technical paradigm. Overnight oil markets advanced.

Ritterbusch and Associates maintains that the dynamic of ever decreasing storage surpluses will provide market support along with bullish temperature outlooks. They contend it “is apt to limit price pullbacks while accentuating any additional bullish adjustments to the short term temperature views. Our previously expected resistance at the $3 mark per nearby futures now becomes support and we expect validation into tomorrow’s expiration of the July contract. July futures have slowly been gaining value against August in recent weeks with assistance from a firmer than expected physical trade that will likely lift back to above the $3 mark today.

“Following the demise of the July futures, we see the August contract edging on up toward the $3.20 area should the weather views maintain a bullish skew. The money managers have shifted back into a net short holding this month but will likely be covering shorts as chart resistance is violated. Nonetheless, we are reluctant to approach the long side of the market as we still see a test of last week’s lows as a possibility. But while we are maintain a sideline stance, we also suggest holding long fall 17/short winter 18 bull spreads.”

Longer term traders are optimistic. “Hands down the market is going higher,” said John Woods, president of J.J. Woods and Associates in New York.

“We are not even into the season yet, and we came down to some serious support at $2.88 to $2.87, and you just don’t bail out on a season this early.

“I like the settlement over $3 and that is going to give us some momentum and there is also a [technical] gap that needs to be filled at about $3.07 from a week or so ago.

“You are going to get that July and August weather. I have been a big bull, and why would you sell $2.90 gas? What’s your risk-reward, $2.50 to $2.45? There is a lot of gas out there, but you are starting to see some weather.”

In its six- to 10-day morning outlook MDA Weather Services said, “The forecast carries similar themes as in the previous report, showing near normal temperatures overall for most of the Eastern Half. This, however, comes with uncertainty pertaining to the storm track through the Midwest, a factor in which models have shown volatility over the past 24 hours. The East sees heat from late in the one-to-five day period lingering into day six before moderating.

“Above normal temperatures are most steady in coverage from the Interior West to parts of Texas, with any risk in the Interior and Southwest being in the warmer direction per raw model consensus.”

In overnight Globex trading August crude oil rose 60 cents to $43.98/bbl and August RBOB gasoline gained 2 cents to $1.4508/gal.