April natural gas is set to open a penny higher Tuesday morning at $1.72 as traders discount, for the moment, a market landscape heavily biased toward not only oversupply but potentially problematic inventory issues at the end of the injection season. Overnight oil markets were mixed.

Forecasters are seeing their models resembling the warm pattern of December. Commodity Weather Group in its Tuesday morning report said, “After a few weeks of volatility, we are now seeing the models ‘settle in’ to a more a consistently warm pattern like we experienced back in December. The models generally agree that the six-10 day is currently the warmest period following some brief cold late this week in the East.

“Widespread much and strong above normal anomalies are featured on all three ensemble feeds, which continues to provide warmer risks to our outlook. The 11-15 day removes the strong above contours but still favors a large area of much above normal temperatures for the Midwest to East and into the Southeast,” said Matt Rogers, president of the firm.

Market technicians have some hope that the market can hold the December lows, and “[We] still see an opportunity for further consolidation…so long natgas can hold $1.682,” said Brian LaRose, a market technician with United ICAP. “However, after Monday’s price action that does not look promising. Take out $1.682 and the next step down targets $1.558-1.585. Reminder: as far as the big picture is concerned a break beneath $1.617 (0.618 of (III)=(V) from 6.493) officially opens the door for a slide to $1.074-1.004 (III)=(V) from 6.493).”

Fundamentals analysts see continued robust production as the albatross around the market’s neck. “This remains a market much in need of some production restraint but one that is seeing negligible signs of such a development,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. “[Monday’s] official EIA monthly indications for December posted only a minuscule decline of 0.3% from November. More importantly, output at the end of last year was still being indicated some 2% above a year ago.

“As a result, the output factor is providing no match for increasingly mild near-record temperature outlooks that have shown up in the updated one- to two-week temperature expectations during the past weekend and within [Monday’s] noon models. As a consequence, the market is being forced to discount a major acceleration in the supply surplus against average levels amid mounting concerns that storage capacity could be challenged next fall unless prices are downsized sufficiently to deter output during the upcoming spring-summer period.”

In overnight Globex trading April crude oil gained 51 cents to $34.26/bbl and April RBOB gasoline eased fractionally to $1.3179/gal.