February natural gas was set to open Tuesday about 14 cents lower at around $3.055, retreating off a surge late last week following a record storage withdrawal.
Forecasters were seeing milder temperatures through the end of the month after frigid conditions this week.
"Weather guidance over the weekend remained mostly unchanged as we saw forecasts remain modestly warmer through the final third of January, in line with our expectations," Bespoke Weather Services said. However, the firm pointed to guidance showing potential cold risks looking ahead to February.
"Our sentiment remains slightly bearish...with the entire natural gas strip selling off but the worst selling clearly sitting at the front of the strip," Bespoke said. "Confidence continues to increase that through the end of January there will not be another major cold snap that will spike natural gas prices…
“A smaller drawdown will be announced on Thursday, and it may take until the second week of February for significant heating demand to return...$2.92 remains in play this week with $3.20 resistance, though a cold mid-February would make selling temporary."
In its six- to 10-day outlook Tuesday, Radiant Solutions said, "Forecast changes over the holiday weekend are in the warmer direction from the Midwest to the East; although, a round of high pressure tracking along the Southern Tier has that region being colder compared to Friday's expectations for the period.
"However, all of the Eastern Half carried temperatures on the warm side of normal and include much and strong aboves early in the Midwest and East but with fading anomalies in the second half as rounds of low pressure track through," the firm said. "Overall, Pacific flow limits durable cold air to Western Canada, but with the West favoring near and slightly below normal temperatures."
As for last week's close at $3.200, analysts with Rafferty Commodities Group on Friday said they were looking to see if February could break above $3.275 at "the upper end of the longer term consolidation pattern that we have been mentioning for months.
"...if the market fails to test or approach the $3.275 area then that would suggest that the longer term pattern is still in effect," the analysts said. This pattern would be "open to playing both sides. A failure at major resistance would cause us to quickly reverse course and continue trading the upper and lower end of the pattern."
February crude oil was set to open about 34 cents lower at around $63.96/bbl, while February RBOB gasoline was down about 1.3 cents to around $1.8369/gal.