March natural gas is set to open 10 cents higher Friday morning at $2.93 as changes to weather forecasts contain ongoing cold in Midwest and eastern population centers. Overnight oil markets rose.

Weather forecasts came in slightly colder overnight as the dominant pattern of western ridging shifts. MDA Weather Services in its Friday morning six- to 10-day outlook said, “The forecast features a pattern shift in this period as the dominant western ridge over the past several weeks regresses back into the central-North Pacific (a response to the recent rise in the SOI — Southern Oscillation Index).

“While this allows for colder temperatures in the West, the East looks to remain quite cold, with widespread much and strong ‘belows’ from the Plains to the East Coast. The forecast trends colder [Friday], once again, in the central U.S., where models point to even stronger cold potential as high pressure drops into the region from mid to late period. The West likewise carries colder risks.”

Analysts acknowledge that the cold weather is at least a temporary supporting factor, but down the road the next major price move is likely to be lower. “[T]he weather factor remains heavily skewed in a bullish direction. Although some significant moderation is expected later next week, this market will likely require a shift toward warmer than normal trends before gathering much downside price momentum,” said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday to clients.

“Regardless, we still see the next 35-cent price move as more apt to develop on the downside rather than on the upside given the fact that a supply surplus has now been established against the five-year averages. While this overhang of about 58 Bcf could prove brief given this week’s extreme cold, a sizable surplus against last year continues to grow and is currently approximating a whopping 680 Bcf. And with winter winding down and production still approaching record levels, the market would appear to be poised for a sizable selloff next month that could easily reach to our targeted $2.50 area. All in all, our basic trading strategy remains the same as we still advise shorts into the April contract within the $2.80-2.88 zone with stop protection above $2.90 on a close-only basis.”

Technical analysts, however, see a case unfolding for a short-term advance that could take prices above $3. “[We] see no reason to abandon the case for an ABC advance unfolding from the $2.567 low,” said Brian LaRose, a technical analyst at United ICAP. “The question for Friday, can the bulls clear the $2.882/2.896/2.885 highs? If so, natgas has immediate room to $3.088 (a=c), possibly even $3.283-3.322 (1.618 a=c). Fail to break out above the recent highs and further consolidation remains possible near term.”

In overnight Globex trading March crude oil gained 52 cents to $51.68/bbl and March RBOB gasoline rose 5 cents to $1.6654/gal.