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Bulls Corralled by Weather Forecasts; March Seen 2 Cents Lower

March natural gas is set to open 2 cents lower Thursday morning at $2.91 as weather forecasts call for even milder near-term temperatures. Overnight oil markets rose.

Overnight weather models turned warmer once again. "The latest six-10 day period forecast is even warmer than [Wednesday's] forecast across the eastern and northern U.S.," said WSI Corp. in a Thursday morning report to clients. "However, there are some colder revisions over the Rockies and Plains late. CONUS GWHDDs are down another three and are only 78.3 for the period. These are 48.9 below average.

"The forecast is already on the warm side of the model guidance, but there are still minor warmer risks over the Plains, Midwest and the East in advance of a storm system. The West and north-central states have some cooler potential late."

Thursday's Energy Information Administration (EIA) storage report is expected to exacerbate the trend of growing year-on-five-year storage surpluses. The surplus currently stands at 45 Bcf, and estimates for this week's report are coming in far less than the historical averages. Last year, 136 Bcf was withdrawn, and the five-year pace stands at a 156 Bcf pull.

IAF Advisors in Houston calculates a 122 Bcf withdrawal, and a Reuters survey of 20 industry cognoscenti showed an average 124 Bcf decline with a range of -104 Bcf to -137 Bcf.

Wednesday's modest two-cent advance was not enough to convince market technicians schooled in Elliott Wave and retracement analysis that a turnaround is in the cards anytime soon.

"Yes, $2.887 [Tuesday's low] was able to provide support on Wednesday," said Brian LaRose, a market analyst with United ICAP. "What is lacking, though, is the violent acceleration higher typically associated with the conclusion of a descending triangle.

"If the bulls cannot step up to the plate and generate a reversal into the end of the week, $2.803 (0.500), $2.701 ("a"="c"), even $2.598 ((A)=(C)) all become viable near-term downside targets," he said in a closing report Wednesday.

In overnight Globex trading March crude oil added 29 cents to $53.40/bbl and March RBOB gasoline rose fractionally to $1.5480/gal.

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