March natural gas opened about 6 cents higher Wednesday morning as weather forecasts reversed the recent trend of ever milder conditions going forward. Overnight oil markets rose.

Forecasters saw a change in the overnight weather data. "[T]he models pivoted colder overnight," said Matt Rogers, president of Commodity Weather Group in a morning report to clients. "While still a warm-prevailing big picture over the next two weeks with below normal national demand, a cold push in the Days 8-11 space got stronger overnight and warmth into the East Coast for the 11-15 day also got a bit weaker compared to yesterday."

Longer term weather trends, however, continue to point milder. "While this winter has been colder than last winter, mother nature has certainly favored the bears," said industry consultant Genscape in a morning report. "Gas weighted HDD's from Nov- Jan (per NOAA) are on track to be approximately 320 below the 30 year average (in terms of gas demand - more than 500 BCF below normal from Nov-Jan) and 280 below the 10 year, respectively.

"The current forecast through the first 12 days of Feb is also milder than normal. Although October is not considered a winter month from a gas storage perspective, October HDDs matter as well. October was the warmest October in over 30 years with gas weighted HDD's 113 below the 30 year average, which was only partially offset by October CDD's being 34 above normal."

Risk managers see the near-term market dominated by weather dynamics and longer term anticipate higher production keeping a lid on prices. "If we see colder than normal temperatures for the balance of the winter, we could see the gas market retest the $4, said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm. "If temperatures start to trend warmer, we could very well see gas back at $3 by the end of the heating season. Looking forward into mid 2017/early 2018, we feel the gas market is going to have a difficult time holding above the mid $3 range as take away capacity out of the Marcellus and Utica expands."

DeVooght counsels trading accounts and end users to stand aside the market, but producers should hold on to earlier price hedges. Producers should continue to hold the balance of an August 2016 - July 2017 $2.70 put strip countered by the sale of a $3.50 call. Alternatively he recommends a long $2.75 put strip offset by the sale of a $3.75 call paying 7 cents, he said in a note to clients.

In overnight Globex trading March crude oil gained 47 cents to  $53.28/bbl and March RBOB gasoline rose 3 cents to $1.5786/gallon.