Natural gas futures were trading slightly lower early Friday as overnight forecasts eased back on near- and medium-term demand expectations; shortly before 9 a.m. ET, the March Nymex contract was off 0.4 cents to $2.693/MMBtu.

Weather models trended somewhat warmer overnight, dropping about 5-6 heating degree days (HDD) from the outlook for the next 10 days, according to NatGasWeather. However, both the European and Global Forecast System models showed colder trends for March 6-9, according to the forecaster.

“The data continues to advertise a mild to warm pattern across the South and East late this week through the middle of next week, besides Monday where a quick cold shot will race across the northern U.S.,” NatGasWeather said. “This will be followed by cold spreading to cover most of the country Feb. 28-March 7 for much stronger than normal national demand…”

The market’s focus is going to turn to the second week of March, “where overnight data favored cold conditions lingering,” the forecaster said. “The cold camp has the burden of proving it, and if they can, weather patterns would be considered quite bullish after the weekend break.”

On Thursday, the Energy Information Administration (EIA) reported a 177 Bcf withdrawal from natural gas storage inventories for the week ending Feb. 15, 5 Bcf more than the highest estimate ahead of the report and a whopping 35 Bcf more than the lowest projection.

The storage number came in well above both last year’s 134 Bcf withdrawal for the week and the five-year average pull of 148 Bcf. Working gas in storage as of Feb. 15 stood at 1,705 Bcf, 73 Bcf below last year and 362 Bcf below the five-year average.

“Weather adjusted, the market was around 1.0 Bcf/d undersupplied” for the report period, “breaking a multi-month trend of a persistent 2.0 Bcf/d oversupply,” according to analysts with Tudor, Pickering, Holt & Co. (TPH). “This shift in the market balance comes as a surprise and reinforces our caution around reading too much into a single data point. We’ll be looking to subsequent data points before declaring the oversupply gone, as it’s difficult to believe the balance swung by roughly 5.0 Bcf/d week/week.”

Impending cold weather raises the prospect of the current 17.5% deficit to five-year average inventories widening in the weeks ahead, the TPH team noted.

“The flip side is that by injection season, continued strength in U.S. production (up about 10.7 Bcf/d year/year) means that inventories likely build at an accelerated pace and longer-term (2020 and beyond) demand remains worrying,” analysts said.

Analysts with Genscape Inc. viewed the 177 Bcf withdrawal from EIA this week as “moderately bullish.”

“Compared to degree days and normal seasonality, the 177 Bcf withdrawal is our first tight stat since November — about 1.5 Bcf/d tight versus the five-year average,” according to the firm.

April crude oil futures were trading 69 cents higher at $57.65/bbl shortly before 9 a.m. ET Friday, while March RBOB gasoline was up fractionally to $1.6189/gal.