April natural gas is expected to open 3 cents lower Wednesday morning at $4.58 as traders consolidate positions ahead of Thursday’s inventory report and the weather outlook is little changed. Overnight oil markets tumbled.

Weather forecasts have for the most part held steady overnight. In its Wednesday morning report forecaster Commodity Weather Group said, “We made colder short-range changes to the Northeast, especially as a powerful winter storm winds up strongly later today. While major snow should miss the core of the major metropolitan areas, very strong low pressure wraps around sharper cold air into these cities by [Thursday] morning with lingering effects through Friday morning.

“Intense wind chills also significantly enhance demand during this interval. Otherwise, the six-15 day outlook is mostly similar to [Tuesday] with a cold-prevailing variable pattern. The Midwest is same-to-colder overall, while the Deep South and Texas are sometimes a bit warmer,” said Matt Rogers, president of the firm. “There are plenty of day-to-day detail challenges, but on the six-10 and 11-15 day big picture composites there is somewhat better ensemble model agreement today allowing us to increment confidence up a bit higher.”

Thursday’s storage report is likely to be a zinger, with estimates crowding if not exceeding 200 Bcf, but to one observer, “the natural gas market also seems relatively complacent regarding Thursday’s DOE storage report, with traders apparently confident that everyone already knows it was cold last week and that it has all been effectively discounted into the price,” said Tim Evans of Citi Futures Perspective.

“However, we note that the 152 Bcf draw in the prior week was supportive for prices and we’re looking for a larger drop for the week ended March 7. Our model points to 185 Bcf in net withdrawals, but it looks as though it could be even more, with the early consensus looking like 200 Bcf or even somewhat more.”

Evans contends that the “growing deficit confirms the market is becoming physically tighter on a seasonally adjusted basis, which typically turns into support for prices over the intermediate term, limiting the downside if not actually driving the market higher.”

Industry consultant Genscape said the storm and cold marching eastward has caused an immediate uptick in demand. “After the recent cold front that rolled through the Midwest into the East last night, Appalachia demand has increased +3.3 Bcf/d to 15.3 Bcf/d since [Tuesday’s] 12.0 Bcf/d. Imports via TGP and Tetco both increased. However, as Appalachia demand declines with warmer weather, imports from southeast are the first to be pushed back.”

Tom Saal, vice president at INTL FC Stone in Miami, sees “continued ‘horizontal’ pricing at $4.608.” In his view, “a big move should be coming. The back years showing strength, Cal’15, Cal’17 & Cal’19.” In his work with Market Profile he expects the market to test Tuesday’s value area at $4.619 to $4.583. He calculates the week’s initial balance at $4.678 to $4.556, and on a breakout higher he looks for objectives at $4.739 and $4.800, and should the market breach the lower end of the initial balance he sees downside targets at $4.495 and $4.434.

In overnight Globex trading April crude oil fell $1.61 to $98.42/bbl. and April RBOB gasoline dropped 2 cents to $2.9466/gal.