The NYMEX August natural gas futures contract was slightly higher in early trading as the market attempts to evaluate the current heat wave with longer-term forecasts which call for normal temperatures, sources said.
As of 10:41 a.m. EDT (1441 GMT) the contract was trading at $3.686/MMBtu, up 1.2 cents from its close Monday.
"After this week, the temperatures fall off appreciably to mostly normal to below-normal readings. The realization of a second-half of July lacking in cooling demand will weigh on the market. This will play directly into our forecast of more losses ahead for natural gas prices in the near-term," said Kilduff Report analysts in a note.
"The temperature forecasts for the next few weeks also look somewhat more supportive than it did on Friday, although still neutral to modestly bearish overall," said Citi Futures Perspective analyst Tim Evans in a note.
"The market is finding value around this range, coal is finding a floor here and we have some hot weather," said Kyle Cooper analyst at IAF Advisors.
"But in the same regard, [natural gas] is unwilling to rally as the summer is half over and you still have bearish year-on-year storage comparisions ... I think we are in a 25 cent range between $3.50[/MMBtu] and $3.75[/MMBtu] until we start to see more evidence gas is gaining market share from coal," Cooper added.
The contract has traded between $3.608/MMBtu and $3.687/MMBtu Tuesday.
