December natural gas is expected to open 2 cents higher Thursday morning at $3.81 as traders attempt to work highly variable near-term weather forecasts into their trading strategies and brace for weekly government storage figures. Overnight oil markets fell.

Thursday's 10:30 a.m. EDT Energy Information Administration (EIA) inventory report will give the market data to finish up traditional end-of-season estimates of supplies heading into the upcoming heating season. But indications are that "traditional" may extend well into November, thus crimping the amount of gas normally withdrawn and continuing to shave molecules off the historical deficits. The deficits are likely to take a hit with Thursday's report as last year 45 Bcf was injected and the five-year average stands at 59 Bcf. For the week ended Oct. 24 estimates are considerably larger.

IAF Advisors of Houston calculates an increase of 87 Bcf, and a Reuters survey of 23 traders and analysts revealed an average 85 Bcf with a range of 77-93 Bcf. Tim Evans of Citi Futures Perspective is looking for a build of 83 Bcf and sees the five-year deficit under 200 Bcf in a few weeks.

"Our own forecast is only slightly less bearish, with a projected 83 Bcf build for last week and above-average injections also expected to continue," said Evans.

By Nov. 14, Evans figures that injections will still be humming along at a 46 Bcf pace with the year-on-five-year deficit down to 187 Bcf. "In contrast with this bearish storage trend, Tuesday's upturn in price suggests the market may have become at least temporarily undervalued, with prices trading at a discount to a year ago even with inventories that are still tighter year on year. It will take more of a recovery to establish that a lasting floor is in place, but with heating demand set to rise in the months ahead, we do see it as a possibility," he said.

Analysts are revising downward their price forecasts. "The prospect of high end-of-winter stock levels are likely to pressure prices toward new lows next spring. Accordingly, we have front-loaded downward revisions with delivered gas prices in 2015 now expected to average $3.75/MMBtu versus $3.90 previously foretold in early August," said Teri Viswanath, director of natural gas strategy at BNP Paribas.

"Despite the looming y/y shortfall in end-of-summer inventories, more supply will become available this winter to meet peak heating demand requirements. Thanks to nearly a dozen new pipeline expansions, focused on removing bottlenecks in the Marcellus region, consumers could potentially access up to 2 Bcf/d of additional supplies over the next few months. What's more, without significant weather-related demand, the surge in production is likely to overwhelm structural demand growth, possibly shifting the current year-on-year storage deficit to surplus before year-end," she said in a report to clients. sees periodic cold episodes in the near term similar to what is hitting the East. "However, there's a lot of variability and the weather models are struggling with the pattern after the middle of next week. What also remains problematic is there will periods of very comfortable temperatures in between these fast-moving chilly weather systems, each providing several days of pleasant temperatures, such as early next week, which will limit the amount of heating demand needed," the company said in a Thursday morning report.

In overnight Globex trading December crude oil slipped 71 cents to $81.49/bbl and December RBOB gasoline lost a penny to $2.1685/gal.