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Weather Models Little Changed Overnight; March Called 3 Cents Lower

March natural gas is expected to open 3 cents lower Thursday morning at $2.01 as traders anticipate government storage data to show little impact on a long-term supply surplus that shows no sign of diminishing any time soon. Overnight oil markets were mixed.

Weather forecasts overnight were only slightly cooler, with heating load estimates in the near term proximate to Wednesday's estimates. WSI Corp. in its Thursday morning report said, "[Thursday's] six-10 day period forecast is a little colder over the East, not as warm along the West Coast, but warmer over portions of the central U.S. CONUS GWHDDs are up 0.3 and are now forecast to be 145.4 for the period. Forecast confidence is average at best today as models appear to be gradually converging on a solution and two cold shots. However, there remain key differences with the magnitude and scope of the cold over the East.

"Once again, the forecast over the eastern two-thirds of the nation has room to waver in either direction, especially during the end of the period. The north-central and eastern U.S. have the most risk to the colder side."

Forecasters continue to struggle to find any weather events capable of significantly diminishing a large storage surplus, and Thursday's inventory report is expected to maintain a hefty year-on-five-year storage surplus. The current year-on-five-year surplus stands at a plump 432 Bcf and estimates for the week ending Jan. 29 show little sign of any significant reduction.

Last year, 112 Bcf was withdrawn and the five-year average is for a 165 Bcf pull. IAF Advisors estimate a withdrawal of 150 Bcf, and Citi Futures Perspective is looking for a 167 Bcf pull. A Reuters survey of 23 traders and analysts resulted in an average 158 Bcf decline with a range of -116 to -202 Bcf.

In overnight Globex trading March crude oil fell 13 cents to $32.15/bbl and March RBOB gasoline rose 2 cents to $1.0319/gal.

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