The expiring March natural gas futures contract is called unchanged at $2.90 as traders factor in a moderating near-term weather outlook along with expected supportive storage data. Overnight oil markets inched higher.

Weather models overnight turned more moderate near term. “[Wednesday’s] six-10 day period forecast has lost 8.5 CONUS HDDs [continental U.S. heating degree days] when compared to yesterday’s forecast,” said WSI Corp. in its morning report. “Most of these changes stem from a 7.3 HDD reduction over the consuming East between Tuesday, March 3 [and] Thursday, March 5. Forecast confidence is considered near to slightly below average standards and results in increased uncertainty with a developing low-pressure system to impact the eastern two-thirds during the middle half of the period.

“Today’s forecast has followed the recent warmer trends of the ECMWF [European] op model over the East regarding the evolution of an inland runner storm system over the East. However, the 0Z and 6Z GFS [Global Forecast System] op and ensembles promote a 10-14 HDD upside risk over the consuming East now as the model shows cold air damming over the Northeast and hence a colder outcome than the ECMWF model.”

Current estimates of Thursday’s Energy Information Administration report on natural gas inventories currently hone in on a 240 Bcf to 250 Bcf withdrawal, but some think it could be higher. Tim Evans of Citi Futures Perspective says those kind of numbers are strong “compared with 111 Bcf in the prior week and 130 Bcf on average over the past five years.

“While the expectations for a 240-245 Bcf net withdrawal certainly look supportive enough, we see some potential for an even larger drop given our model’s higher 257 Bcf estimate,” he said. “Tuesday’s weather forecast was mixed, but we saw it as supportive for the market overall.” Evans’ data shows a year-on-five-year deficit ballooning to 292 Bcf by March 13.

“In effect, this would tighten the market back up to where it was in early December. So far the market has been quite tolerant, even complacent, regarding both the current cold snap itself and its likely impact on storage levels, but we continue to see potential for a short-covering rally to $3.20 or more over the next few weeks,” Evans said.

In overnight Globex trading April crude oil added 19 cents to $49.28 and April RBOB gasoline gained fractionally to $1.8231/gal.