Continued signs of colder temperatures arriving around the middle of this month had natural gas futures trading a few pennies higher early Tuesday. The March Nymex contract was up 2.5 cents to $1.844/MMBtu shortly after 8:30 a.m. ET.

The overnight weather data was mixed, according to NatGasWeather. The forecaster observed milder trends in the European model around Feb. 10-13 and colder trends around Feb. 16-18; the Global Forecast System was little changed overnight.

“Much of the data shows more impressive cold into the northern U.S. Feb. 14-17, but this is subject to milder trends in time, much like the weather data has done all winter by over-forecasting cold on the back end of the 15-day forecast,” NatGasWeather said. “...But the overnight European model was rather cold around Feb. 16-18, so that does help offset the bearish setup for the coming 10 days before then.”

The pattern around mid-February “should be cold enough to satisfy, especially in the European model.”

Meanwhile, the recent collapse in oil prices -- fueled by fears of the coronavirus and its potential demand impacts -- could materially impact future natural gas production trends. Genscape Inc. analysts said Tuesday they’re modeling “substantial reductions” in their gas production forecast based on the recent hit to oil prices.

“In early January, the West Texas Intermediate (WTI) benchmark price had topped $65/bbl,” Genscape senior natural gas analyst Rick Margolin said. “Since then the price has plummeted, with trading yesterday slipping below the $50/bbl mark for the first time in 13 months. This leads to a significant reduction in our production outlooks for oil and gas by causing rig counts to decline much faster than efficiency gains can compensate for.”

The oil price decline also means major impacts to forecast natural gas output because of the amount of Lower 48 associated gas produced from oil-directed drilling activity, according to Margolin.

As of Monday Genscape’s “expectations for 2020 gas production growth have been curtailed by nearly 1.4 Bcf/d versus our previous main forecast update from six weeks ago,” the analyst said. “2021 production expectations were reduced by more than 2.3 Bcf/d versus the previous forecast. As a result, 2021 production is now expected to post a year/year decline.”

Looking in the nearer term, Energy Aspects issued a preliminary estimate calling for the Energy Information Administration to report 135 Bcf withdrawal from storage for the week ended Jan. 31. The firm’s estimate is based on a “moderate 0.15 Bcf/d recovery in production as maintenance and some lingering freeze-offs subside. Despite this warmth, our power models are pointing to a strong gas burn reading at 30.0 Bcf/d.”

March crude oil futures were trading $1.29 higher at $51.40/bbl at around 8:30 a.m. ET, while March RBOB gasoline was trading about 2.7 cents higher at $1.5005/gal.