March natural gas is expected to open 11 cents higher Tuesday morning at $4.69 as traders mull expanding storage deficits at the expense of moderating weather forecasts. Overnight oil markets rose.

Analysts see the market stabilizing after its recent run to the downside. Addison Armstrong of Tradition Energy sees traders “[factoring] in forecasts for moderating temperatures and declining heating demands in the next couple weeks. Gas prices have now dropped nearly $1.20, or 20%, in less than a week of trading amidst indications that the severe winter weather and record heating demands of the past couple months is nearing an end. But severely depleted storage levels that have dropped to a 10-year low and expectations of a heavy spring nuclear power plant maintenance and refueling season will provide support for the market in the coming months.”

Weather forecasters predict that the latest cold spell will subside by the end of the week, but Appalachia demand has increased by 1.5 Bcf/d to 18.0 Bcf/d from last week’s 16.5 Bcf/d. Columbia gas, which has critical days for storage in effect for the rest of the week, has also deemed Feb. 12 as a transport critical day in all market areas on the TCO system.

MDA EarthSat in its morning one- to five-day outlook shows a strong temperature divide with points east of a line from North Dakota to West Texas below to much below normal and to the west above to much above normal.

Analysts see the storage deficit as gathering market interest. “The updated views have been interpreted by some as signaling an end to this exceptionally cold winter given the upcoming arrival of March and expiration of the March futures contract,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. “However, we will reiterate that short-term demand expectations are only part of the equation and that the supply side will demand renewed focus going forward. While the dynamic of deficit expansion will likely be reversed after next week’s EIA release, we are maintaining an opinion that downside follow-through will need to price in an unusually low supply with which to begin the injection cycle in about six weeks.

“We feel that the shift toward some broad-based temperature moderation going forward toward month’s end has been largely discounted via the sharp price reduction of around 15-20% that has been seen in recent sessions. From here, we feel that a pre-EIA storage rally is likely that could carry nearby futures back up to the $5 region. With this in mind, we are shifting focus to the April contract where we would advise probing the long side within the $4.38-4.42 zone while maintaining close stop protection below $4.35 on a close-only basis.”

In overnight Globex trading March crude oil added 9 cents to $100.15/bbl and March RBOB gasoline gained a penny to $2.7368/gal.