December natural gas is set to open 18 cents higher Wednesday morning at $4.42 as overnight six- to 10 and 11- to 15-day forecasts turned colder mainly in the Midwest. Overnight oil markets rose.

Tim Evans of Citi Futures Perspective sees Tuesday’s 10-cent drop as “a technical correction that saw the contract retreat as much as 19.2 cents (4.4%) from the prior close. However, with the temperature outlook still featuring colder than normal temperatures, the market recovered to near unchanged before fading into the close.”

Evans is looking for a withdrawal of 18 Bcf in Thursday’s storage report compared to early estimates in the 10-15 Bcf range. “Although our forecast suggests some potential for a minor bullish surprise, we note that any surprise will have a relatively small impact relative to the impact the heating demand and the larger storage withdrawal for the current week will have.

“After the midday [Tuesday] forecast revisions, the overall change in our storage forecast was mostly a question of timing, with the week ending Nov. 28 somewhat less bearish and the week ending Dec. 5 somewhat less bullish than a day ago. The chief bullish feature remains this week’s colder than normal temperatures that we see translating into a 130 Bcf net withdrawal. We think the market will have a further opportunity to probe the upside ahead of the release of that number at noon on Nov. 26, just ahead of the Thanksgiving holiday.”

In his work with Market Profile, Tom Saal, vice president at INTL FC Stone in Miami, is looking for the market to test Tuesday’s value area at $4.318 to $4.220 before moving on and “maybe” testing $4.045 to $3.981. In the weekly Profile calculations Saal identifies an Initial Balance of $4.347 to $4.113 with upside breakout targets of $4.464 and $4.581 and downside objectives of $3.996 and $3.879.

Saal sees buying March ’15 and selling April ’15 as a viable hedge trade. That trade, also know as the “widow maker,” is presently trading at a differential of 49 cents, but Saal sees a near-term target of 60 cents.

“All current winter month’s long positions [rolled] into the next month will eventually be rolled into March ’15 (the last month of the winter season). In addition, fundamentally, the market should be at its most short physical position in March (storage drained),” he said in a Wednesday morning note to clients.

In overnight Globex trading December crude oil added 21 cents to $74.82/bbl and December RBOB gasoline gained 3 cents to $2.0723/gal.