January natural gas was set to open down about 5 cents Thursday to around $2.663, with the market trying to get a read on how much heating demand to look for from a frigid blast expected later this month.

“Weather guidance overnight lost a decent number of gas-weighted degree days (GWDD), primarily in the long-range, where we are seeing a highly volatile forecast,” Bespoke Weather Services said in a morning note to clients. “Models continue to show that from Dec. 23 likely through the end of the month there will be an incredibly sharp gradient between intense cold across the Midwest and intense warmth across the Southeast.

“The result will be large GWDD swings on individual model runs, with the latest overnight swing” showing less intense cold in the long-range, the firm said. “Yet we are still seeing indications that the southeastern ridge may be overdone on modeling guidance and that models over the next few days may trend back colder in the long-range.”

Meanwhile, looking ahead to the 10:30 a.m. EDT storage inventory report from the Energy Information Administration (EIA), consensus estimates were anticipating a withdrawal after the rare net injection reported last week.

A Reuters survey on average was calling for EIA to report a 60 Bcf net withdrawal from U.S. gas stocks for the week ended Dec. 8. Responses ranged from -49 Bcf to -95 Bcf. Last year, 132 Bcf was withdrawn, and the five-year average is a withdrawal of 78 Bcf.

Stephen Smith Energy Associates revised its estimate Tuesday to a 64 Bcf withdrawal from 60 Bcf. Kyle Cooper of ION Energy predicted 61 Bcf withdrawal. PointLogic Energy was calling for a 57 Bcf withdrawal.

“The significant increase in week-on-week withdrawals comes amid demand gaining nearly 8.3 Bcf/d week-on-week,” PointLogic analysts said in a note to clients earlier in the week. “On the supply side, total production for the week decreased by 0.6 Bcf/d with the majority of the decrease coming from the South Central region in the Eagle Ford Shale and Gulf of Mexico.

“The decline in available supply within the South Central region adds some high-side risk to this week’s EIA report.”

As for the technical picture, ICAP Technical Analysis analyst Brian LaRose said testing support in the $2.50s this week isn’t out of the question.

“If we are going to get a bear market rest stop before natural gas hits the densely packed band of targets stretching from $2.553-2.516 this would the ideal spot at $2.657,” LaRose said. “A pause is not necessary whatsoever though. In the event the bulls are unable to find their footing we would be prepared to test $2.553-2.516.

“Note that we will be treating any bounce as a temporary pause in a downtrend.”

January crude oil was set to open about 25 cents lower at around $56.34/bbl, while January RBOB Gasoline was trading about a penny higher at $1.6574/gal.