With weather models diverging overnight on the amount of cold that could arrive later this month, February natural gas futures were trading close to even shortly before 9 a.m. ET Wednesday, down 1.2 cents to $2.955/MMBtu.

The Global Forecast System (GFS) model overnight continued to a favor a colder pattern that could deliver stronger than normal demand Jan. 21-24, while the European model failed to trend any colder to match the GFS, according to NatGasWeather.

“If the European model had trended colder overnight for this period, it would have gone a long way in suggesting bearish weather sentiment would finally be coming to an end,” the forecaster said. “But since it didn’t, this makes today’s early morning and midday GFS data important to see if it trends milder or holds on to the colder setup for Jan. 21-24. As we’ve been mentioning, rapid colder trends are possible during the last 10 days of January as frigid air will be just across the border into Canada.”

After front month prices spiked earlier Tuesday as high as $3.053 before falling back into range-bound trading once resistance held, the market appears to be “proceeding cautiously” as it awaits more convincing evidence of cold returning later this month, EBW Analytics Group CEO Andy Weissman said.

In the latest data, “the European and American models continued to add support for the return of strong ridging conditions on both coasts, potentially leading to much cooler weather,” Weissman said. “Weather forecasts the next few days will be particularly important. If support for ridging continues to increase, prices could move up sharply by early next week. Today, however, range-bound trading is likely to continue.”

Meanwhile, the warm temperatures in December and to start January have created such a “substantial inventory cushion” that it would take a “severe and sustained cold spell” to drive significantly higher gas prices this winter, according to Energy Aspects. The firm estimated it would take an additional 350 Bcf of demand returning to its balances, which as of the most recent Energy Information Administration report showed end of December storage at 2.68 Tcf, up from an earlier estimate of 2.57 Tcf issued on Dec. 20.

The firm said that based on recent forecasts for January, “another 250 Bcf or so would be lost in demand versus our projections based on 10-year normal weather. That is a substantial shift in just two weeks, with the likelihood for the staggering year/year storage deficit that has characterized balances to be nearly erased by the end of January” if more cold does not materialize this month.

Factoring in recent near-term forecasts, “our end-March inventory projection removes most scarcity concerns, with an estimate north of 1.55 Tcf,” Energy Aspects said.

February crude oil futures were up $1.40 to $51.18/bbl shortly before 9 a.m. ET, while February RBOB gasoline was up about 4.4 cents to $1.4065/gal.