February natural gas is expected to open 4 cents higher Wednesday morning at $2.30 as traders factor in falling production and weather forecasts that at least in the near term indicate cold over the East and Midwest. Overnight oil markets rose.

Natural gas bulls have contended that falling rig counts will eventually slow production, and for the moment that seems to be the case. Industry consultant Genscape reported that “Lower 48 dry gas production has been in steady decline since Jan. 7. Spring Rock’s pipe-based estimates show today’s production at 70.93 Bcf/d, about 1.15 Bcf/d below the 72.08 Bcf/d from Jan. 7. All regions (except West Coast) are in decline during this period.

“The bulk of the declines are in Texas, where today’s estimated production is 0.64 Bcf/d below Jan. 7. San Juan and Gulf Coast are showing the next largest declines at 0.15 Bcf/d and 0.13 Bcf/d, respectively. Gulf volumes are recovering from recent declines, however. Volumes through Discovery’s Offshore Mainline meter had fallen from 600 MMcf/d down to 136 MMcf/d but are now up to 409 MMcf/d in Evening Cycle nominations,” the company said in a morning report to clients.

Overnight weather models near term favor cold over populous eastern and Midwest energy markets. “The forecast sees a mix of changes [Wednesday] but continues to feature below normal temperatures on average from the Midwest to the East Coast,” said MDA Weather Services in its morning six- to 10-day forecast. “This is as a cold Canadian air mass drops southward into the North-Central U.S. this weekend and encompasses the Midwest at the start of this period.

“The feature progresses into the East by mid-period, with temperatures expected to peak at much below normal levels for a large part of the eastern half. However, as the feature further presses eastward and into the Atlantic, return southerly flow provides warming trends beyond mid-period in the eastern half.”

MDA said risks to the forecast arise from MDA favoring the ECMWF [European] model, but “the GFS suite holds onto a much colder pattern in the central U.S. Warmer risks remain in the West due to storminess along the coast.

In overnight Globex trading February crude oil rose 91 cents to $31.35/bbl and February RBOB gasoline rose a half cent to $1.0911/gal.