Both physical traders for Thursday natural gas and futures traders got a reprieve Wednesday from two days of double-digit declines as near-term weather trends turned cooler, and overnight weather models showed cooling in the more deferred time frames.

The NGI National Spot Gas Average added 11 cents to $3.08, and only a single point tracked by NGI fell into the loss column. Most points gained about a dime.

Futures traders were willing to give the market the benefit of the doubt if it could rally another dime. At the close March had risen 5.1 cents to $3.168, and April was up 4.9 cents to $3.214. March crude oil jumped $1.07 to $53.88/bbl.

"The cold weather did not appear, so the market has been breaking down," said a New York floor trader. "If the market can get to $3.22 to $3.25, it could go, and maybe a little short term buying will surface, but if it doesn't get out and get short."

Some short-term buying may show up Thursday following the release of storage data by the Energy Information Administration (EIA). Last year 169 Bcf was withdrawn and the five-year withdrawal rate stands at 166 Bcf.

This week, however, the draw looks to be less than half of normal. Societe Generale estimated a 70 Bcf withdrawal, and Stephen Smith Energy is banking on a pull of 91 Bcf. A Reuters poll of 20 traders and analysts showed an average of an 88 Bcf decline with a range of -70 Bcf to -115 Bcf.

Futures derived most of their support from Tuesday overnight weather models.

The models "pivoted colder overnight," said Commodity Weather Group President Matt Rogers in a note Wednesday 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" from Tuesday.

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 Inc. Gas-weighted heating degree days (HDD) from November through January, per the National Oceanic Atmospheric Association "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 February 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 HDDs 113 below the 30-year average, which was only partially offset by October CDDs being 34 above normal."

Risk managers see the near-term market dominated by weather dynamics. Longer term, they 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 $4.00," said DEVO Capital President Mike DeVooght. "If temperatures start to trend warmer, we could very well see gas back at $3.00 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-$3.00 range as take away capacity out of the Marcellus and Utica expands."

DeVooght suggested that trading accounts and end users 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 recommended a long $2.75 put strip offset by the sale of a $3.75 call paying 7 cents.

In physical market trading, near-term temperatures were forecast to trend cooler. predicted the high Wednesday in Boston of 42 degrees would slide to 39 Thursday and 33 by Friday, 3 degrees below normal. Chicago's 37 Wednesday max was seen dropping to 25 Thursday and 26 by Friday, 6 degrees below normal.

"High pressure over the Dakotas will spread over the Midwest through Friday night," said the National Weather Service in Chicago. "Cooler air associated with the upper level trough will also shift overhead leading to high temps only in the 20s."

Gas at the Chicago Citygate rose 7 cents to $3.08, and gas at the Henry Hub added 12 cents to $3.12. Gas on El Paso Permian rose 4 cents to $2.85, and deliveries to Opal were quoted 4 cents higher at $2.93. At the SoCal Citygate, next-day gas changed hands at $3.31, up a penny.

Bigger gains were seen in the Northeast. Deliveries to the Algonquin Citygate gained 84 cents to $5.39, and packages on Iroquois Waddington rose 34 cents to $3.86. Gas on Tenn Zone 6 200L added 80 cents to $5.26.