January natural gas is expected to open 9 cents higher Friday morning at $3.72 as traders stretch their weather horizons past the holidays and anticipate the arrival of colder Canadian air. Overnight oil markets probed new lows.

Following Thursday’s brief rally and ultimate failure to advance off a supportive inventory figure, technical analysts point out that the bullish case currently rests on a classic double bottom chart pattern unfolding. At present that’s a stretch.

“No change,” said United ICAP analyst Brian LaRose in closing comments Thursday to clients. “To have any shot at a double bottom forming into the $3.541-3.537 vicinity bulls need to launch a rally that clears the 0.500 retracement of the decline from $4.529 (currently $4.057). The 12-month strip would need to clear $3.771. [We] have no case for a bottom forming otherwise. [We] see room down to $3.305 for natgas and $3.330 for the strip at minimum if the bears crack $3.537 first.”

On a more fundamental note in its morning outlook, Natgasweather.com said Thursday’s storage report will not be able to hold a candle to upcoming storage reports expected to make significant inroads to the short- and long-term storage shortfalls.

“Deficits were able to gain 20 Bcf on supplies, but it will pale in comparison to the impressive amount of ground that will be made up when next week’s draw comes in significantly lighter than the five-year average. These light draws are clearly bearish for prices, and if the string is going to end, colder temperatures would need to arrive after Dec. 22 as weather patterns until then will just not be nearly cold enough over enough of the U.S. to be significant,” the firm said.

“The weather system for next week over the Midwest will be fairly chilly, but the truly cold arctic air will remain confined over the northern U.S. We still expect how weather patterns shape up going into the last week of December very well could dictate the future direction of natgas prices. We still like colder temperatures returning sometime around or just after Dec. 22-24 as the gates holding very cold arctic air over northern Canada begin to open, although the weather models continue struggling on how much cold air the first weather system or two will tap as they track through the Midwest and Northeast. But even if the first systems fails to grab a significant amount, the next several that line up to follow will have better chances.”

Tom Saal in his work with Market Profile said, “[Thursday] was a ‘neutral day’ structure for Market Profile…infers market indecision. If the market makes a new low price ($3.585) for the week, it will be a ‘neutral week’ structure. A ‘neutral week’ and a settlement today near the weekly low would be bearish (if that occurs),” he said in opening comments Friday to clients.

In overnight Globex trading January crude oil fell $1.03 to $58.92/bbl and January RBOB gasoline shed a half cent to $1.6216/gal.