Physical natural gas for Wednesday added nearly a dime in Tuesday trading as gains in the East outdistanced additions in the Midwest, Rockies and California.

All but a handful of points made it to the positive side of the trading ledger, and the NGI National Spot Gas Average rose 7 cents to $2.18. Weather forecasts in major metropolitan areas showed seasonal tendencies with a slight warming trend toward midweek.

Futures managed a modest gain but traders are not optimistic spot futures can hold $2.20. At the close, February had posted its fifth consecutive advance and had added 2.2 cents to $2.180 and March was higher by 3 tenths of a cent to $2.158. March crude oil reversed some of Monday’s losses and rose $1.11 to $31.45/bbl.

Futures traders see some possible short-term gains with Wednesday’s expiration of the February contract but eventually expect spot futures to trek toward $2. “I don’t think we are going much higher than $2.20, and on the downside I am looking at $2.05,” a New York floor trader told NGI.

“I don’t see us rallying too much, maybe the market [March contract] gets up to $2.25 and on the downside $2 with a 25-cent range over the next two weeks. It looks like the market risk is lower,” he said.

A more fundamental question of any large-scale market recovery lies in to what extent drilled but uncompleted (DUC) wells come to market.

“Many prognosticators of oil and gas markets have found themselves on the wrong side of U.S. production calls throughout the shale era after failing to understand and model the risks associated with operational momentum,” said Kathryn Miller, principal at BTU Analytics, a Lakewood CO-based analysis and consulting firm. “Increases in well productivity brought higher potential returns, and every company in the oil patch scrambled to gain the assets, people, and infrastructure to grow production (and hopefully cash) in the future. As supply growth outpaced demand, prices sank, but production hasn’t responded with an equal intensity. Why doesn’t production respond accordingly? The same reason you can’t turn around an aircraft carrier on a dime: momentum.

“The momentum of the shale boom can be seen in the large overhang of drilled but uncompleted wells sitting out in the field today, looming over the market and weighing on any potential oil price recovery. BTU Analytics expects a significant amount of DUCs to be completed throughout the year as producers look to maximize the efficiency of their investment dollars in a depressed commodity price environment.

“Until the number of DUCs returns to levels more aligned with historical working inventory levels (three to six months of drilling), we expect their threat to loom large over the market and have a dampening effect on any near-term price recovery. But their longer term impact could loom just as large. If producers steer too much capital away from drilling, and instead harvest DUCs to maintain production and cash flow in 2016, the human capital behind the rig fleet could be lost to other industries, making service cost inflation all but guaranteed when U.S. supply growth is again needed. It looks like this hangover will be felt for years to come,” Miller said.

Forecasts out toward the middle of February call for a cold East and warm West. WSI Corp. in its Tuesday morning report said, “[Tuesday’s] 11-15 day period forecast now features below-average temperatures over the eastern half of the nation and above-average temperatures over the western half. Today’s forecast is colder over the eastern two-thirds of the nation. GWHDDs are up 6.3 for days 11-14 and are forecast to be 145 for the whole period. Confidence in the forecast is only average, at best, as there is better model support for cold over the eastern half of the nation.

“However, there are key technical differences with the pattern and the corresponding anomalies. The eastern two-thirds of the nation has a risk to the colder side. This is especially the case if the GFS [Global Forecast System] guidance comes to fruition as it depicts an amplified EPO [Eastern Pacific Oscillation] driven pattern.”

Traders are still maintaining a bearish posture for now. “This market is proving to be one that is very difficult to keep down as intraday selloffs of some 2-3% are usually being followed by a recovery into the plus column,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments Monday. “While the temperature guidance when looking out to the first of February looks skewed decidedly in favor of above-normal temperatures at the start of the week, the market reacted to some shifts toward cold temps within some of the noon models.

“The market is also looking ahead to an unusually large storage draw to be reported on Thursday. We feel that a decline in excess of 200 Bcf has been largely priced in and that daily updates to the short-term temperature views will be guiding prices through the rest of this week. We are maintaining a bearish stance for now and would suggest holding short March contracts established last week in the $2.16-2.19 zone as we expect a test of last week’s $2.04 lows as a minimum when looking across the coming week.”

In physical market trading prices in the Marcellus continued to gain relative to downstream market points along the REX Zone 3 Expansion.According to the NGI REX Zone 3 Tracker interconnects in Illinois and Indiana were up about a nickel, but in the Marcellus gains went well past a dime.

Gas on Dominion South added a stout 18 cents to $1.59 and deliveries to Tennessee Zone 4 Marcellus added 12 cents to $1.41. Packages on Transco-Leidy changed hands 17 cents higher at $1.47.

Deliveries to NGPL at Moultrie County, IL rose a nickel to $2.17 and gas at REX’s interconnect with Panhandle Eastern in Putnam County, IN rose 4 cents to $2.17as well. Gas on ANR in Shelby County, IN was higher by 4 cents to $2.17 also.

Points further downstream from REX Zone 3 also showed about the same improvement. Gas at the Chicago Citygates was quoted a nickel higher at $2.22 and deliveries to Consumers rose 4 cents to $2.24. On Michcon Wednesday deliveries were seen 4 cents higher at $2.23.