February natural gas is expected to open 17 cents higher Friday morning at $4.90 as traders go back to the drawing board and refigure season-ending inventories now expected to be significantly lower than earlier estimates. Overnight oil markets weakened.

Analysts see increased risk going into the weekend as temperature forecasts can often shift dramatically. “The market’s ability to snap back up into fresh territory overnight following [Thursday’s] post-EIA pullback of as much as 26 cents attests to the voracity of this weather induced price spike,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. “But with the market virtually attaining the psychologically important $5 mark, maintaining buying interest today could be challenged by pre-weekend profit-taking that will force some wide price swings.

“Temperature forecasts can change dramatically over a weekend, as has been seen on several occasions in recent months, and as a result existing longs will be looking for reasons to accept at least partial profits in today’s trade. We are viewing yesterday’s lows as near-term support and would not rule out a quick return to this area within the next couple of sessions.”

Analysts at Genscape see a fundamental shift in New England demand. “During the recent cold snap, Algonquin Citygate prices blew out to last winter’s levels. The magnitude of the past two winters’ blowouts are much greater than that seen in the previous four winters. While it was cold (record cold in fact) the temperature deviations during the recent cold spike weren’t necessarily extreme. The same is true with temperatures during last winter’s price spikes; while low they didn’t reach unprecedented levels. However, we have observed the increase in citygate demand in relations to temperature,” the company said in a morning report.

Algonquin Citygate prices are certainly behaving differently. The gains in prices do not seem correlative to the admittedly much colder temperatures. According to NGI data, Algonquin Citygates dropped more than $40 Thursday to $34.17, but that followed a posting Wednesday of $78.30.

“Despite — or because of — this shift, however, gas prices are reacting differently this and last winter than versus the same temperature and demand levels of previous winters. The New England market is paying progressively higher prices for gas at the same temperature and demand levels as previous years. This echoes our statements earlier in the winter that LDC’s are not sensitive to prices and instead more focused on reliability of natural gas deliveries.”

In overnight Globex trading March crude oil fell 23 cents to $97.09/bbl and March RBOB gasoline skidded more than a penny to $2.6534/gal.