Natural gas futures prices were slightly stronger early Friday as weather models showed colder weather moving in for the second half of January, especially in key demand centers of the country. The Nymex February gas futures contract was trading 7.5 cents higher at $3.02 with the market also awaiting fresh storage data, which was expected to reflect deficits that continue to tighten because of recent mild weather.

On the weather front, model guidance overnight Thursday moved in line with expectations, increasing medium and long-range gas-weighted degree days (GWDD) and showing a pattern into the second half of January that could increasingly shoot colder air down into the eastern third of the country, according to Bespoke Weather Services.

“We had always been looking for cold risks to increase moving through January, and models are finally showing an increase in negative Eastern Pacific Oscillation ridging upstream that could help dislodge colder air into the Midwest and East,” Bespoke chief meteorologist Jacob Meisel said.

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This is increasingly likely as January progresses, so although GWDDs through the next two weeks should still be far below average, the firm looks for Week 3 forecasts to trend increasingly bullish. European guidance remains far warmer in the long range than other guidance, “meaning caution is still needed as tropical forcing is volatile and models are struggling with it.”

Meanwhile, the market is also looking ahead to what is expected to be another lighter-than-normal storage withdrawal. The Energy Information Administration is scheduled to release its weekly storage report at 10:30 a.m. ET, a day later than usual because of the New Year’s Day holiday.

As of late Thursday, a Bloomberg survey of eight market participants showed estimates clustering around a median withdrawal of 44 Bcf, with estimates generally ranging from minus 31 Bcf to minus 75 Bcf. A Reuters survey pointed to a withdrawal of 47 Bcf and was based on a wide range of responses from minus 25 Bcf to minus 92 Bcf.

IAF Advisors analyst Kyle Cooper called for a 31 Bcf withdrawal for this week’s report, while EBW Analytics Group predicted a 36 Bcf pull. Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at a 33 Bcf pull.

Bespoke, which had earlier called for a 44 Bcf withdrawal, revised its estimate to a 42 Bcf draw, as the firm sees evidence of even more holiday demand destruction, and “if anything, a print even in the mid- to upper 30s is a possibility.

“This could hit gas prices and severely ease storage concerns, but any temporary price dip is unlikely to last with cold risks and balance tightening,” Meisel said.

The wide range of storage withdrawal estimates is partly centered around the difficulty of predicting the impact of the Christmas holidays on demand, according to EBW.

Indeed, Genscape Inc.’s forecast called for a reported withdrawal of 24 Bcf. The estimate is a composite of the firm’s supply/demand model -- which showed an 18 Bcf pull -- and its storage facility model, which showed a 28 Bcf withdrawal.

For the week ended Dec. 21, EIA reported a 48 Bcf withdrawal, leaving inventories at 2,725 Bcf, 623 Bcf less than the year-ago period and 647 Bcf below the five-year average.

For its part, Bespoke said its market sentiment has finally turned slightly bullish as the firm sees a strong combination of increased long-range cold risks, which are expected to grow through next week, as well as tightening daily balances that reflect a return of firmer power burns following New Year holiday demand destruction. Meanwhile, production continues to dip and even though Canadian imports are back, elevated liquefied natural gas exports are back near record highs as well.

“This is occurring as demand returns even without weather yet, indicating that through next week, the market should tighten even further as cold air returns later in the week,” Meisel said.

Crude oil futures were trading about 90 cents higher at $48/bbl, and RBOB gasoline futures were trading 2 cents higher at around $1.37/gal.