January natural gas was set to open about a penny higher Friday at around $2.695, with some mixed changes overnight in the weather outlook not offering much inspiration for the bulls.
Forecasters have been tracking a wintry blast expected to move through around the last week of December.
"The overnight weather data was slightly warmer with a cold shot across the Great Lakes and Northeast late next week, but then colder after Dec. 24," said NatGasWeather.com, "especially in the European model, which had been much warmer compared to the rest of the data.
"Specifically, the weather data wasn't as strong with a ridge over the eastern U.S. Dec. 24-28, thereby allowing frigid air pouring into the western and central U.S. late next week to gradually" push into the East and increase gas demand, the firm said.
Thursday's storage report from the Energy Information Administration (EIA) came in slightly bullish to market expectations at -69 Bcf, but it wasn't enough to lift prices.
"This week's data indicate a supply/demand step-change as the market gets out of the post-holiday funk, moving back towards last month's levels implying around 2-3 Bcf of undersupply," analysts with Tudor, Pickering, Holt & Co. said in a note to clients Friday. "Friday's inactivity in gas prices is a bit of a head-scratcher, especially as the Climate Prediction Center increased the probability of La Nina lasting through the winter from 65-70% to more than 80% Thursday.
"However, short-term weather forecasts are still exhibiting some volatility, throwing off the market," TPH analysts said. "We continue to believe upcoming supply drivers will outstrip any weather-related demand, capping winter gas."
Genscape Inc. said based on degree days and normal seasonality the 69 Bcf withdrawal "appears tight versus the prior five years by about 1 Bcf/d. Relative to the prior week, total power generation was up around 25 average GWh (AGWh). Week on week, total renewables were up by 5 AGWh, with nuclear, wind and solar components all up by 1-2 AGWh versus the previous week.
"Total thermal generation rose 20 AGWh, with coal generation up 6 AGWh," Genscape said. "Estimated gas burn was up almost 14 AGWh week/week for an estimated average 2.7 Bcf/d more burn."
January crude oil was set to open about 28 cents higher at around $57.32/bbl Friday, while January RBOB Gasoline was trading about a penny higher at $1.6815/gal.