February natural gas is expected to open 7 cents higher Friday morning at $2.96 as near-term weather forecasts turn supportive and traders await better selling opportunities. Overnight oil markets continued lower.

Weather forecasts turned colder overnight for major population centers. WSI Corp. in its Friday morning report shows the entire eastern half of the country at below or much below normal temperatures with the exception of Florida. “[Friday’s] six-10 day period forecast is colder than previous forecasts over the eastern two-thirds of the nation due in part to model trends and the period shift. Confidence in the forecast is average today as medium-range models are in reasonably good agreement with the large-scale pattern most of the period.”

Risks to the forecast include greater cold “across the eastern two-thirds of the nation, especially early in the period. SoCal and the Southwest may run a bit warmer.”

Analysts see the undersized storage report Wednesday as sending the bulls into the new year battered and beleaguered. “Although the EIA [Energy Information Administration] storage report prompted a brief downward response, it has been easily overshadowed by some ongoing shifts in the short-term temperature views,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments Wednesday.

“Outlooks are becoming mixed but generally suggestive of smaller cold deviations from normal than had been anticipated at the beginning of this week. Short of a significant shift in the weather forecasts over the holiday, this market appears poised for slippage back to a $2 handle by week’s end with eventual declines likely to the $2.75 area.

“Back to [Wednesday’s] EIA release, the 26 Bcf withdrawal compared with average industry ideas for about a 41 Bcf decline. Although the figure was unable to maintain value south of the $3 mark [initially], the much smaller than expected decline continued to underscore strong supply side dynamics in the form of near record production and easing import availability. Overall, we are suggesting a bearish trading stance, but given the vagaries of the weather views at this time of the year, we will suggest awaiting price advances in March futures to the $3.25 area before establishing short holdings.”

In overnight Globex trading February crude oil fell 72 cents to $52.55/bbl and February RBOB gasoline dropped 2 cents to $1.4521/gal.