After struggling to move meaningfully into the black the past two trading sessions, March natural gas futures were set to slump early Thursday as a key weather model lost a significant chunk of demand in its latest run. The Nymex March gas futures contract was trading about a nickel lower at around $2.61 just before 8:30 a.m. ET, while April was trading about 4 cents lower at around $2.615.

Earlier in the morning, the March/April spread had briefly moved into negative territory, when March futures traded as much as 2 cents below April. Analysts had called for the so-called widow-maker spread to collapse soon as, after widening to as much as about $1.75 in November, the spread had slipped to less than 2 cents in recent days.

The spread -- or lack thereof -- signals no concern about a supply crunch, and the latest weather data reaffirmed that sentiment as the European model trimmed a huge chunk of demand from its forecast. The American Global Forecast System (GFS) and the European model had been at odds for several days regarding the intensity of a pair of weather systems moving into the country beginning this weekend.

Wednesday’s GFS weather model trended much colder, and even though it backed off a little in the latest overnight data, it was still solidly colder versus earlier in the week.

“However, the big story overnight is the European model lost a huge amount of demand after being solidly and consistently colder than the rest of the data until the others finally caught up on Wednesday,” NatGasWeather said.

It’s possible the European model flips back colder next run, “but the loss of 23 heating degree days (HDD) compared to Wednesday’s data led to a rapid sell-off over the past hour where prices dropped 8 cents,” the firm said. The data continues to favor swings in demand during the next two weeks as numerous cold shots are forecast to sweep across many regions of the country, but still with mild breaks across the South and East that really stand out, it said.

Meanwhile, today’s Energy Information Administration (EIA) storage report will be factoring in last week’s Arctic blast that brought record-breaking cold across the Midwest, Ohio Valley and Northeast. National survey averages were clustered around a draw of 247 Bcf, nearly 100 Bcf larger than the five-year average draw of 150 Bcf.

A Bloomberg survey of six market participants had a withdrawal range of 222 Bcf to 253 Bcf, with a median of 247 Bcf. A Reuters poll of 19 analysts had a draw range of 222 Bcf to 260 Bcf and a median of 247 Bcf. Bespoke Weather Services projected a 253 Bcf pull, EBW Analytics expected to see a 245 Bcf draw, and Kyle Cooper of IAF Advisors pegged the draw at 241 Bcf.

Last year, the EIA reported a withdrawal of 116 Bcf for the same week, and the five-year average draw stands at 150 Bcf. Inventories as of Jan 25 stood at 2,197 Bcf, 14 Bcf below year-ago levels and 328 Bcf below the five-year average.

Crude oil futures were trading more than 75 cents lower at around $53.25/bbl, and RBOB gasoline futures were trading more than 2 cents lower at around $1.435/gal.