Despite warmth expected to linger through at least the middle of the month, February natural gas was set to open slightly higher Wednesday in a modest rebound after prices plunged below $3 on the last trading session of 2018. The Nymex February gas futures contract was trading at around $2.947, up seven-tenths of a cent, just before 9 a.m. ET.

The modest rebound comes as prompt month prices tumbled below $3 in a light New Year’s Eve session given the continued lack of sustained strong demand. The latest round of weather data did begin to show hints of colder air arriving later this month, however, the all-important European guidance remained the most bearish in showing warmth easily dominating through the middle of January, according to Bespoke Weather Services.

Other guidance showed a building negative Eastern Pacific Oscillation upstream that could deliver cold to at least the eastern third of the country, the firm said.

“While we are skeptical of models showing cold risks seeing how much they have been delayed, we do still expect these cold risks to increase through January as the upstream pattern should gradually trend more favorable,” Bespoke chief meteorologist Jacob Meisel said.

For now, the forecaster slightly favors a Global Ensemble Forecast System/Global Ensemble Prediction System (EPS) blend over just the warm EPS model guidance as it would expect gas-weighted degree days to remain closer to average in the second half of January.

For its part, EBW Analytics said it is becoming increasingly likely that January -- like December -- will be milder than normal as the natural gas market has been losing expected demand at a ferocious rate, with a net loss during the past two weeks of more than 150 Bcf.

“Two weeks ago, every major forecaster was predicting a transition to much colder weather in late January or early this year,” EBW CEO Andy Weissman said.

This forecast was based on European and American model runs calling for the Alaska Ridge to reform, allowing cold Canadian air to flood into the United States. “While our forecast was not as far off as others, it has become clear that these forecasts (including our own) are a complete bust,” Weissman said.

This radical shift in weather will sharply reduce the natural gas storage deficit, he said. While a price rebound is still possible if cold weather returns, “risks of severe price spikes have been largely eliminated.” Furthermore, “the rebuild of storage lays the groundwork for much lower gas prices through most of 2019.”

Crude oil futures were trading about 70 cents lower at $44.74/bbl, and RBOB gasoline futures were trading more than a penny lower at $1.29/gal.