The expiring November natural gas futures contract is expected to open 2 cents lower Wednesday morning at $2.07 even though traders anticipate a rebound from deeply oversold conditions amidst a round of short covering. Overnight oil markets gained.

According to overnight weather data, the East is expected to experience above normal temperatures in the latter half of the six- to 10-day period. MDA Weather Services said in its morning 6- to 10-day outlook “A strong negative PNA pattern with a ridge in the East and trough in the West promotes widespread much aboves in the eastern half while some belows are found in the West. Some onshore flow from high pressure to the north limits temperatures in the East early before moving out and allowing temperatures to rise to much above normal levels by Day 8.

“Meanwhile, the strong ridging pushes temperatures up to strong above normal levels for a day or two in the Upper Midwest. The ridge is expected to weaken late as a trough over Northeastern Canada begins to dip southward.” Risks to the forecast include temperatures peaking higher across the East and rain limiting temperature advances in the South early on.

Analysts are circumspect about the recent price plunge. “[T]he sharp drop in prices over the past two weeks raises some questions regarding what it all means,” said Tim Evans of Citi Futures Perspective in closing comments Tuesday. “[B]ut in fundamental terms we see it as both a reflection of the forecast for warmer than normal temperatures that will allow some further robust storage refills and a case of what’s cheap becoming even cheaper. While there may be some temptation to look for an extension of the downtrend we see the market as increasingly oversold. The recent decline appears to have been exhausted just ahead of the $1.902 per MMBtu low from April 2012, but even a minor new low would not turn us bearish at this point.

For Thursday’s storage report Evans calculates a build of 66 Bcf and by mid-November he sees the year-on-five year surplus growing to 265 Bcf, up from a current 163 Bcf surplus.

Tom Saal, vice president at FC Stone Latin America, LLC in his work with Market Profile expects the market to test Tuesday’s value area at $2.107 to $2.065. He says the market “could test last week’s value area” at $2.476 to $2.356. “The Nov’15 NG contract expires today. Expect to see something we have not seen in a while, short covering,” he said in a morning note to clients.

In overnight Globex trading December crude oil rose 36 cents to $43.56/bbl and December RBOB gasoline gained a penny to $1.2856/gallon.