April natural gas opened 4 cents higher Wednesday morning at $2.98 as traders put the pencil to variable near-term weather conditions and evidence of a production turnaround. Overnight oil markets rose.
Weather models overnight continued to show eastern cold, but also incursions of warmth. In its morning six- to 10-day outlook, MDA Weather Services said, "The forecast undergoes a mix of changes versus yesterday, with the most notable change being a stronger push of cold air into the eastern U.S. mid-period. This comes as strong high pressure over central Canada presses toward the Northeast, with models showing good general consistency with this feature although highlighting further cold risk.
"Meanwhile, greater warming is noted across the south-central U.S., with Texas maintaining much above normal temperatures throughout the period. The West sees a cooler/wetter trend as ridging shifts to the Midcontinent and Pacific troughing advances in."
MDA said risks to the forecast include Models highlighting additional cold risk in the Northeast as well as model differences with regard to how far south and west the mid-period cold airmass progresses.
Analysts show declining production making a gradual turnaround. "Further evidence of a gradual production rebound can be found in the slow erosion of the year-on-year production deficit," said industry consultant Genscape in a morning report to clients. "[Wednesday's] Spring Rock Daily Pipe Production estimate has enabled that year-on-year deficit to drop below 1 Bcf/d for the first time since late January.
"Spring Rock's estimate has today's production at 71.7 Bcf/d. This brings the rolling 30-day average to 71.58 Bcf/d, about 0.91 Bcf/d below last year's average for the same 30-day period."
In its Early View estimate of the week's storage report, The Desk survey of 11 traders showed an average 54 Bcf withdrawal with a range of -45 Bcf to -52 Bcf. Last year 9 Bcf was pulled, and the five-year average is for an 85 Bcf withdrawal.
In overnight Globex trading April crude oil gained 93 cents to $48.65/bbl and April RBOB gasoline rose 2 cents to $1.6065/gallon.