January natural gas is set to open 3 cents lower Wednesday morning at $2.20 as forecasters continue to see no immediate link to market-moving cold Canadian air trapped at higher latitudes. Overnight oil markets eased.

Weather models were little changed overnight. Commodity Weather Group in its morning report said, “No major changes are noted again this morning with a steady state forecast picture ahead. The models vary on some detailing, but they generally agree on a powerful, El Nino-driven, warm-dominated pattern over North America, especially through next week. Some detail challenges include a possible East Coast storm system and some cooler wedging for the immediate East Coast cities again as we have seen a little bit of this week.

“No significant cold air connection exists, so the ‘cooler’ risks are mainly to high temperatures as overnight lows stay on the warmer side again. In the 11-15 day, we continue to track some advance of colder air back into the West again,” said Matt Rogers, president of the firm.

Tim Evans of Citi Futures Perspective sees the moderate temperature outlook limiting storage withdrawals. He forecasts a pull of 60 Bcf for this week’s report, slightly greater than historical averages, but by Dec. 18 pulls less than the five-year average put the year-on-five-year surplus at a stout 324 Bcf.

“This rising storage surplus confirms the market is becoming increasingly well supplied on a seasonally adjusted basis, which normally represents downward fundamental pressure on prices. The natural gas market is not entirely without upside potential as we continue to view its current level as a conservative valuation and temperatures will be cooling seasonally over the next two months, but we think the market will continue to struggle without some colder than normal temperatures to help motivate a rally.”

Forecasts of heating load confirm the trend warmer. The National Weather Service predicts that for the week ended Dec. 5 New England will see 182 HDDs or 28 less than normal. New York, New Jersey and Pennsylvania are expected to endure 156 HDDs, or 39 below normal, and the greater Midwest from Ohio to Wisconsin is forecast at 170 HDDs, or 52 less than its normal seasonal tally.

Fundamental and technical analysis often diverge, and market technicians versed in Elliott Wave and retracement analysis see conditions in place for a modest rally. “Last week the market rebounded from the key 0.7862 retracement support [$2.105],” said Walter Zimmerman, vice president at United ICAP. “So the congestion zone remains intact. In Elliott Wave terms, this should allow for a further rebound to the $2.370 area, and possibly even $2.560,” he said in a weekly report to clients.

He added, though, that in a longer-term technical timeframe, wave counts suggest that if the market fails to hold $1.902, a test as low as $1.00 is in the cards.

In overnight Globex trading January crude oil fell 67 cents to $41.18/bbl and January RBOB gasoline slid 3 cents to $1.3347/gal.