February natural gas is set to open 2 cents higher Thursday morning at $3.29 as traders factor in slightly cooler temperatures before what is expected to be a moderate storage report. Overnight oil markets were mixed.

Forecasters are mulling just how much cold, Canadian air is likely to make it south into the U.S. during the six- to 10-day period, and according to WSI Corp. the "changes are mixed, but the colder changes over the central and northern U.S. outweigh any warmer revisions," the firm said in its Thursday morning report to clients. "As a result, CONUS GWHDDs are up 2.7 to 122.9 for the period, which are still 32.3 below average.

"The forecast has some risks in either direction. There are colder risks across the northern states, especially the north-central U.S. due to its proximity to the polar air over west-central Canada."

Analysts saw Wednesday's 6-cent decline as being due to trader expectations of a bearish storage report. Last year 98 Bcf was withdrawn from storage and the five-year pace stands at 107 Bcf. If projections are correct, this week's report won't even come close. "While the temperature forecast was similar to a day ago, expectations for Thursday's DOE storage report for the week ended Dec. 30 ratcheted lower to 72-82 Bcf in net withdrawals as last week's milder temperatures and a holiday-related drop in commercial, industrial and power demand were seen limiting the pull from storage," said Tim Evans of Citi Futures Perspective in closing comments Wednesday.

Estimates are all over the map. Evans calculates a 106 Bcf withdrawal and PIRA Energy estimates a 65 Bcf pull. A Reuters poll of 17 traders and analysts showed an average 82 Bcf with a range of -61 Bcf to -135 Bcf.

There is something of a silver lining within the blast of cold air slicing across the MISO footprint. Hefty winds are likely to lessen the amount of gas needed for electrical power generation. "[The] bitterly cold polar air will engulf the power pool during the remainder of the week into the majority of the weekend," WSI said. "Maximum temps will range from the single digits below zero to the 20s across the Midwest along with minimum readings in the teens below and above zero. The cold will lead to lake effect snow most days.

"Modest wind generation is expected through Saturday. A moderating southerly wind will likely provide a boost of wind gen during Sunday-Monday. Output is forecast to approach 10 GW."

In overnight Globex trading February crude oil rose 36 cents to  $53.62/bbl and February RBOB gasoline eased a penny to $1.6997/gal.