November natural gas futures were down 6.0 cents to $3.260/MMBtu shortly before 9 a.m. ET Thursday, with forecasts easing off cold from the prior day’s guidance as the market turns its attention to potentially bearish government storage data.

Bespoke Weather Services said weather models maintained long-range cold risks overnight but weakened the intensity of “extremely cold” guidance Wednesday.

Both the European and Global Ensemble Forecast System models showed cold sticking around into the end of Week 2, including “favorable blocking to trap cold weather across the U.S. into early Week 3,” the firm said. “Cold is increasingly shown peaking Days 12-14 and then gradually fading, a trend that if continued could eventually prove bearish as we look for the pattern to break down later Week 3 into Week 4.

“…Our sentiment remains neutral as through we await a period of heavy selling once cold eases and hold a bearish bias, we are skeptical this morning’s selling is sustained,” Bespoke said.

Overnight gas-weighted degree day losses combined with physical prices and expectations for a loose weekly storage report figure appeared to be pressuring the front the strip early Thursday, the firm said.

With the pre-winter cold expected to widen storage deficits even further in the coming weeks, traders are looking to Thursday’s Energy Information Administration (EIA) weekly storage inventory report for at least some improvement in the dismal picture. Estimates this week have clustered around a build in the mid- to upper 80s Bcf, which is well above last year’s 51 Bcf injection and slightly above the five-year average 79 Bcf injection.

Bespoke projected an 82 Bcf build, Kyle Cooper of IAF Advisors expected an 87 Bcf build and EBW Analytics forecast a build of 89 Bcf. A Reuters poll of 23 market participants had a range of 71-99 Bcf, with a median of 82 Bcf. A Bloomberg survey of market participants had a range of 71-99 Bcf with a median of 84 Bcf. Intercontinental Exchange also settled at an 84 Bcf injection.

Last week, the EIA reported a 90 Bcf injection that lifted inventories to 2,956 Bcf, 627 Bcf below year-ago levels and 607 Bcf below the five-year average.

“It was warmer than normal over the eastern and southern U.S. and cooler than normal over the West and Plains” during this week’s storage report period, NatGasWeather said, noting that it’s looking for an 83-84 Bcf build. “It’s a very tricky build to predict due to both bearish and bullish impacts from Hurricane Michael, the Columbus Day holiday, strong nuclear outages,” and low heating degree day and cooling degree day totals.

“Prices tested $3.34 Wednesday for the third time and failed to take it out,” the firm said. “This makes today’s after-EIA report trade of considerable interest to see how winter strip prices react…if they drop back within the recent trading range or if bulls can finally take out resistance.”

Looking at the technicals, bulls are close to breakout territory, according to ICAP Technical Analysis analyst Brian LaRose.

“It will not take much to have us setting our sights on higher levels,” LaRose said. “Bulls just need to bust through $3.383-3.388. Succeed and we will be taking aim at the $3.494-3.543-3.550-3.580 neighborhood next. Fail to punch through resistance and the door will be open for an extended period of sideways to lower price action. It all comes down to what the bulls can do Thursday.”

As of around 8:30 a.m. ET, November crude oil was trading 92 cents lower at $68.83/bbl, while November RBOB gasoline was down about 2.8 cents to $1.8909/gal.