January natural gas was set to open about three cents higher Wednesday at around $2.712 as the market continued searching for balance following recent selling.

The gains shown in the morning hours Wednesday came on the heels of a 15-cent selloff the day before that dropped the prompt-month below the $2.75 support level.

Bespoke Weather Services said in a note to clients Wednesday that the current outlook for heating demand presents upside for prices, forecasting gas-weighted degree days above seasonal averages over the next 15 days. Guidance indicates chilly temperatures boosting gas demand from Dec. 24 to the end of the month.

“Long-range forecasts hold further bullish risk thus far this morning,” Bespoke said. “Despite such intense selling yesterday, our sentiment is tilting back to slightly bullish in the face of these significant cold trends in the long-range. Though the market is still hunting for balance, we see the potential to add significantly more heating demand if this long-range pattern” holds,” and “we would expect it to stabilize and potentially help bounce the natural gas market.”

Still, even colder temperatures may be required this winter to keep prices from retreating in 2018 amid production increases from the Northeast, Haynesville Shale and Permian Basin, according to analysts with EBW Analytics Group.

“Ultimately, as the market becomes increasingly aware of the likely natural gas oversupply ahead, natural gas prices could fall below $2.50/MMBtu this spring,” the analysts said in a note to clients Tuesday. “Rampant production growth for the second straight year remains the key driver, and potential forecast warming only heightens the extent of downside price risk.

“…Although colder weather can quickly increase space heating demand, other factors guiding natural gas price formation are continuing to fall into alignment and increase the odds of a significant price decline ahead. Even in a slightly colder-than-normal second half of winter, therefore, the forward curve for the balance of 2018 is likely to decrease.”

Meanwhile, predictions for Thursday’s Energy Information Administration (EIA) storage report have been coming in firmly on the side of a withdrawal after last week’s reported injection. Stephen Smith Energy Associates revised its estimate Tuesday to a 64 Bcf withdrawal for the week ended Dec. 7 after earlier calling for a 60 Bcf withdrawal. PointLogic Energy was calling for a 57 Bcf withdrawal.

January crude oil was set to open about 43 cents higher Wednesday at around $57.57/bbl, while January RBOB Gasoline was trading fractionally higher at around $1.7018/gal.