November natural gas futures were trading 3.2 cents higher to $3.126/MMBtu at around 8:30 a.m. ET Tuesday, building on Monday’s rally as stubborn storage deficits finally appeared to be resonating through the winter strip with heating season fast approaching.

Large storage deficits that have not shown signs of improving with only a fews weeks left in injection season have been the catalyst for the recent rally, according to NatGasWeather. Markets could also be reacting to recent data showing cooler temperatures across the northern United States around mid-month, Oct. 14-17, the firm said.

“The overnight weather data was mixed,” with the Global Forecast System “backing off on the arrival of cooler air across the northern U.S. until a little later,” which would lead to a loss in several heating degree days, NatGasWeather said. “However, the European model remained to the cooler side from Oct. 13-17, although not quite as cold as Monday afternoon’s data.”

Markets could be getting “nervous with the winter season approaching and with deficits not expected to improve through October,” the firm added. “This puts a lot of pressure on record production improving deficits in November and early December before more ominous polar air threatens…we expect the nervousness of the markets to produce volatile sessions in the weeks ahead, where sharp daily price swings of 5-10 cents will be common,” with the direction dependent on weather trends.

Markets have started to price in availability risk for winter because of low natural gas stockpiles, a situation that developed partly because of summer/winter spreads not creating much incentive for merchant storage injections, along with above-normal cooling demand this summer, according to Energy Aspects.

The consulting firm pointed to a recent notice from Dominion Energy Transmission Inc., which said because of “historic lows” in its inventory levels, the operator may need to limit some storage activity to protect the operational integrity of its system and meet firm customer commitments.

“The white flag has already been waved on deliverability concerns, even before the heating season is underway,” Energy Aspects said. “We long ago described 3.45-3.50 Tcf as the so-called ”critical balancing point’ for winter, but our projected 3.26 Tcf carryout has gradually been shaved down as injections have been modest despite an ongoing series of production records.

“Supply growth beyond our forecast allows a little wiggle room in our pre-season inventory floor, but not 200 Bcf worth.”

From a technical standpoint, ICAP Technical Analysis analyst Brian LaRose late Monday pegged resistance at $3.096-3.119 as the “gatekeeper” for the recent rally.

“As long as the bears can prevent this band of resistance from being exceeded on a closing basis, a longer period of consolidation has the potential to unfold near-term,” LaRose said. “After Monday’s price action, that appears doubtful. If the bears cannot stop natural gas dead in its tracks to start the day there is airspace up to $3.227-3.229-3.258-3.275 next.”

Shortly before 8:30 a.m. ET, November crude oil was trading about 8 cents higher at around $75.38/bbl, while November RBOB gasoline was trading fractionally lower at around $2.1245/gal.