March natural gas is called 4 cents lower Friday morning at $2.67 as near-term weather forecasts show a moderately warmer pattern over the West. Overnight oil markets rose.

Overnight weather forecasts moderated. MDA Weather Services in its Friday morning six- to 10-day outlook said, “A mix of changes are seen today, including a much warmer period in the West. This change comes with increased model support for a stronger central Pacific low, and a disturbance in the eastern Pacific, that enhance ridging over the West. Above-normal coverage increases as a result; although, the continuation of strong ridging in the northeast Pacific and over Alaska promotes the intrusion of cold Arctic air to the east of the Rockies. Texas is also less cold early. The East is marginally colder today, particularly early when strong below normal readings are widespread.”

Analysts are thinking that ongoing and forecast cold along with the expected heavy usage hasn’t been fully priced into inventory draws for upcoming weeks.

“Although the weather outlooks could shift during the upcoming extended weekend, we feel that the severe broadly based cold will be translating to some unusually large supply draws into the month of March and that such a development has yet to be fully priced,” said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients. “As a result, we won’t rule out another price lift back to above the $2.80 area where we would suggest short positions into the April contract.”

Just like most analysts, Ritterbusch’s 180 Bcf estimate of Thursday’ Energy Information Administration storage withdrawal was off the mark. “We have overestimated the size of the weekly storage draws for about three consecutive weeks, and it would appear that some bearish shifts in the balances are developing below the surface that have slowed the pace of withdrawals,” he said. “The most obvious factor would appear to be continued production strength that has attracted much less attention than has been the case in the liquids. The market appears to have priced in year over year output gains of at least 3.5% across this year and the fact that this strength is unlikely to be deterred by some probable well freeze-offs during the next couple of weeks has been largely shrugged off.

“With a strong output pace virtually assured across the second quarter and with the long-standing supply deficit against five-year average levels now virtually erased, short position holders are now back on the offensive. The late stage of the heating cycle is also a consideration as is year over year comparisons that are now indicating a supply surplus stretched to beyond 540 Bcf.

In overnight Globex trading March crude oil rose $1.74 to $52.93/bbl and March RBOB gasoline added 3.5 cents to $1.6307/gal.