February natural gas is set to open a penny lower Friday morning at $3.99 as traders balance a long heating season ahead with a stable supply deficit. Overnight oil markets rose.

Analysts see the recent price decline as an opportunity to step up and take a long position going into the latter half of the heating season. “With the winter-to-date gains unwound and yet still more than half of the heating season ahead, we are growing more positive on gas prices,” said Teri Viswanath, Commodities Strategist with BNP Paribas. “A very cold start to the season has boosted heating demand, rapidly depleting inventories to levels that suggest that the prolonged slackness in the balances has been eliminated. The consequent sizeable y/y storage deficit implies a significantly reduced baseline from which working gas in storage would seasonally build next summer.”

She recommends “early positioning on the next injection season in the wake of this week’s sell-off. Buy out-of-the-money calls on Oct ’14 and/or sell puts on Q2 ’14. [T]he current price dip presents an opportunity to initiate trading positions based on more constructive fundamentals ahead,” she said in a morning note to clients.

Others aren’t so sure of a long position. “We feel that the highs for this year were likely placed late last month at the $4.58 area and that this week’s chart damage will likely be restricting upside price progress from here to about the $4.20 area unless a major and unusual cold event is seen again,” said Jim Ritterbusch of Ritterbusch and Associates. “However, such a development appears unlikely as this winter period proceeds and days become longer. We will further emphasize that the dynamic of supply deficit expansion that drove the November-December 25% price advance is likely to be stabilized following next Thursday’s storage outlier.”

Weather forecasters call for some incoming cold, though nowhere near as severe as the juggernaut that marched through the Midwest and East earlier this week. In its six-to 10-day outlook, Commodity Weather Group shows a below-normal temperature ridge extending from South Carolina north to Illinois and bounded on the East by Virginia and the West by Mississippi. New England is seen above normal, and the Mountain West is forecast to be under a ridge of above-normal temperatures extending from Montana to the desert Southwest including California.

“Plenty of detail challenges exist next week as a storm and then a transient cold push engage eastern North America. There are still colder risks around the storm system mainly due to dynamic cooling effects behind it for the Midwest and South toward middle next week, while a transient cold push late week could be a bit stronger,” said Matt Rogers, president of the firm.

“The models agree that the cold push is shorter-lived, with warmer weather returning faster in the second half of the holiday weekend. The 11-15 day continues to be a massive challenge. The American models still favor a much warmer pattern, while the European ensembles edged slightly warmer today, but rebuild the Alaskan ridge by days 14-15 (which would lead to colder 11-15 day changes by this Sunday and Monday’s updates). We leaned more toward the Euro.

In overnight Globex trading February crude oil rose $1.08 to $92.74/bbl and February RBOB gasoline gained 2 cents to $2.6625/gal.