December natural gas is expected to open a penny higher Friday morning at $3.99 as traders await storage figures expected to show the last increase in inventories for a while, and traders ponder whether the market can hold $4 support. Overnight oil markets rose after sinking to 4-year lows Thursday.

Following Thursday’s sharp selloff top traders are on the sidelines. “Although this market may have picked up some bearish spillover from the oil liquidation, the larger driver appears to be some further shifts in some of the private forecasts in the direction of milder temperature trends beginning later next week,” said Jim Ritterbusch of Ritterbusch and Associates. “As a result, the current cold spell is being increasingly viewed as a “one-off” that could impact only a couple of EIA storage reports. Furthermore, the expected temperature moderation is forcing a reassessment of supply availability with tomorrow’s supply peak likely to exceed 3.6 Tcf by a slight margin.

“And, while we expect a supportive figure with our forecasted EIA some 4-5 Bcf below average industry ideas, we look for updates to the temperature views to rule going forward as the market begins to exit the shoulder period. [Thursday’s] selloff dropped below our expected support at the $4.05 level and as a result, this chart deterioration provides a caution flag against attempts to establish a long position. We remain sidelined for now but will reassess in the light of tomorrow’s storage data as well as temperature updates.”

Whether or not the cold air pounding the country is a “one-off” event remains to be seen with calendar winter over a month away, but forecasters at Commodity Weather Group see a normal 11-15 day period with above normal temperatures confined to California and the desert Southwest. “A powerful cold outbreak continues to dominate next week with good model agreement. We edged Chicago and St. Louis into upper single digit low temperatures by Tuesday morning, an impressive feat for November, while we also shifted the East Coast a bit colder by the middle of next week with highs only in the upper 30s Tue-Wed for Philadelphia,” said Matt Rogers, president of the firm.

“Despite demand increases for next week, warmer changes continue to mount by the second half of the 6-10 day into the 11-15 day. While no major warming is seen at this point, the loss of the gatekeeper and Alaskan high pressure ridging features help mix in milder Pacific air to keep the warmer risks greater than the colder ones for the overall 11-15 day. Our current scenario favors a brief warm-up in the East with a transient weak cooling by days 14-15. The models are still in good agreement on a late month stratospheric warming that favors colder risks for December.”

Market bulls could recover some of the 21 cents lost Thursday should the 10:30 a.m. EST release of inventory figures provide a bullish surprise. Current thinking is that inventories will have increased about 40 Bcf. Last year 22 Bcf were injected and the five-year pace stands at 16 Bcf. Analysts at United ICAP calculate an injection of 37 Bcf and Citi Futures Perspective is looking for a build of 46 Bcf. Industry consultant Bentek Energy forecasts a 38 Bcf injection utilizing its flow model, but concedes its supply-demand model predicts a higher build.

In overnight Globex trading December crude oil gained 38 cents to $74.59/bbl and December RBOB gasoline added 2 cents to $2.0034/gallon.