Natural gas futures finished slightly higher in Monday’s trading as forecasts added to demand expectations later this month, just not enough to sustain a significant rally. The February Nymex contract added 0.5 cents to settle at $2.135/MMBtu; March settled at $2.134, up 2.2 cents.

In the spot market, prices strengthened throughout much of the Lower 48 coming out of the weekend, with cool temperatures and precipitation in some regions providing enough impetus for gains despite comfortable conditions in the South; NGI’s Spot Gas National Avg. rose 14.0 cents to $2.080.

The midday Global Forecast System (GFS) data added 10 heating degree days to the outlook compared to its overnight run, according to NatGasWeather.

“The latest GFS, like the rest of the weather data, is quite bearish through Jan. 15, but still with a decent cold shot across the Midwest and Northeast Jan. 16-18 for stronger demand,” the forecaster said. However, the latest GFS data also showed cold “losing its grip across the East Jan. 19-22” in a pattern that would drop national heating demand back to below-normal levels.

Overall, NatGasWeather viewed the latest GFS run as “still bearish, just not quite as bearish as it’s been.”

Looking at the balance picture, Genscape Inc. projects an increase in exports moving forward as flows to Mexico are restored following holiday period impacts.

“In the 14 days prior to the holidays, exports had averaged 5.1 Bcf/d,” Genscape senior natural gas analyst Rick Margolin said. Between Christmas Eve and the day after New Year’s Day, “flows averaged 4.2 Bcf/d. We also saw a notable dip on Friday due to maintenance out of South Texas. Another similar maintenance event will take place Jan. 16-22.”

As for Lower 48 production, Genscape’s estimates as of Monday showed supply hovering around 94 Bcf/d, including more than 0.5 Bcf/d of impacts from freeze-offs. However, freeze-offs appear to be “slightly waning,” according to Margolin.

Meanwhile, Friday’s Energy Information Administration (EIA) storage report, a 58 Bcf withdrawal recorded for the week ended Dec. 27, came in about 0.35 Bcf/d looser than the five-year average, according to Genscape’s calculations.

“Although the reported pull was still looser than the five-year average -- as the numbers have been all year -- the looseness was not as pronounced,” Margolin said.

From a technical standpoint, bears last week mounted a challenge to the front-month lows recorded in August, noted analysts at Enverus.

“Last week’s low of $2.083 is another indication that this recent decline from the early November high may not be over,” the Enverus analysts said. “Prices will have to garner additional selling to challenge those lows; however, the speculative short position is already extended.

“Weather forecasts will have to extend the mild pattern further into the winter to facilitate the two-month downtrend to test or break below the August low of $2.029. Any rally will need to break above recent highs of $2.258-2.297 to force a re-examination of the speculative shorts.”

Crude Risk on Iran Tensions

In the wake of the U.S. airstrike last week that killed Iranian military leader Qasem Soleimani, analysts continue to mull the potential implications for crude prices.

At Goldman Sachs Commodities Research, analysts told clients that as of Monday, Brent futures reflected an “already elevated” risk premium and that it would require an “actual supply disruption” to maintain recent prices around $69/bbl.

“Although the rally in oil suggests the market attaches a significant probability to current tensions leading to an oil supply disruption, we would argue that assessing such specific consequences is difficult at this time,” the Goldman team said.

“The range of potential scenarios is very large; spanning oil supply shocks or even oil demand destruction -- which would be negative to oil prices.”

Widespread Gains, Mild Down South

Western hubs recorded some of the largest spot price gains Monday as the National Weather Service (NWS) was calling for a cold front to move through the northwestern portion of the country Tuesday evening.

Northwest Sumas climbed 28.0 cents to $2.465, while Malin picked up 26.0 cents to $2.470. Opal added 32.5 cents to $2.500.

“Across higher elevations of the Cascades and Northern Rockies, snowfall should be measured in multiple feet,” the NWS said. “Lighter snow accumulations are possible in the Northern High Plains.”

The front moving in coincides with planned maintenance on the Westcoast Energy Inc. system, an event that Genscape expected to restrict about 150 MMcf/d of flows into the Pacific Northwest.

“Pacific Northwest gas demand in December was more in line with five-year norms” versus the “considerably higher-than-normal” demand observed in October and November, Genscape’s Margolin said. “This relative decrease in demand in the month of December, together with the hefty increase in Pacific Northwest import capacity thanks to Westcoast’s flow enhancements, has taken the pressure off storage.”

For December, Northwest Pipeline’s Jackson Prairie storage facility withdrew 22 MMcf/d, the lowest average for any December during the past six years, the analyst said.

Elsewhere, prices pushed higher from the Midwest to the Northeast as forecasts called for some light snowfall in some areas. Emerson added 13.0 cents to $2.090. Algonquin Citygate jumped 32.5 cents to $3.025, while farther upstream Dominion South notched 18.0 cents to average $1.800.

A low pressure system was expected to track through the interior Northeast Monday, bringing light snowfall except for areas “downwind of Lake Ontario” that were expected to see higher accumulation totals, according to the NWS. Monday night into Tuesday, “another frontal system is expected to move across the Upper Great Lakes region, causing another round of light snow.

“Meanwhile, farther south a low pressure system is forecast to begin strengthening across the Tennessee Valley and track across the Mid-Atlantic and offshore,” the forecaster said.

This was expected to lead to some snow in the Southern and Central Appalachians Tuesday morning.

“As the low tracks northeastward, light snow could spread across portions of the Mid-Atlantic on Tuesday,” the NWS said.

Farther south, gains along the Gulf Coast were generally capped to within a dime. In East Texas, Katy picked up 6.0 cents to $1.995.

NatGasWeather said “unseasonably mild conditions” should prevail over the southern half of the Lower 48 this week, including highs climbing into the 50s to 70s.