March natural gas is set to open 11 cents lower Tuesday morning at $2.04 as once again, weather forecasts could not ascertain any market-moving cold and fund managers covet the short side of the market. Overnight oil markets collapsed.

No major changes were reported in overnight model runs, but a few modest changes mostly tilted in the direction of further moderation. “The model consensus — especially the more skillful ensembles — all lost single-digit HDD levels of demand overnight,” said Commodity Weather Group in its Tuesday morning report.

“We see mainly warmer changes in the short-range period for the Midwest, East and South, but then mixed changes prevail for the six-10 day with a warmer West but slightly colder East and South. The 11-15 day is also mixed, but warmer changes were seen more commonly in the South and West with still some variability for the Midwest to East. Our preliminary demand change estimate is also a single-digit HDD loss compared to yesterday’s forecast.

“The two big stories right now are still a short-lived but possibly stronger cold event in the Feb. 8-12th range, and then a flattening of the jet stream to return a potentially much warmer pattern by the middle of February. In fact, the jet stream looks of the late 11-15 day modeling this morning suggests potentially bigger warmer risks to our outlook by that point,” said Matt Rogers, president of the firm.

Analysts also see the market showing little inclination to embrace the temperature factor and instead concentrating on burdensome storage. “This market’s price plunge since the beginning of this new week and month appears out of sync with recent revisions to the short term six-14 day temperature views that are offering a mix at the present time,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning report to clients.

“However, we will note that the forecasts for colder than normal trends are favoring only minor deviations from normal. And given a sizable supply surplus against five-year averages of around 432 Bcf that is unlikely to be disturbed significantly by this week’s EIA release, the money managers have obviously become much more assertive in gravitating back into the short side of this market. While the open interest configuration is still skewed heavily in favor of a large net short speculative holding, this net bearish length is not approaching our red zone that would suggest another phase of short covering.

“The market also appears to be sending off signals that the temperature factor is diminishing in importance amid this advanced stage of the HDD cycle. Meanwhile, some expected production slippage could be seen going forward given the magnitude of both oil and gas rig count declines. But any drop in production could easily be offset by an equivalent uptick in imports or possible downsizing in exports.”

In overnight Globex trading March crude oil shed $1.24 to $30.38/bbl and March RBOB gasoline lost 7 cents to $1.0149/gal.