With weather forecasts into March beginning to show some signs of thaw, March natural gas futures on expiration Wednesday probed lower for a majority of the session. The contract reached a low of $8.880 before going off of the board at $8.930, down 27.6 cents from Tuesday’s finish. The April contract, which will now take over as front-month contract, finished Wednesday at $9.060, down 19.2 cents.

After trading north of $100/bbl in the last couple of sessions, April crude also beat a retreat on Wednesday. The contract reached a high of $101.15/bbl but ultimately settled at $99.64/bbl, down $1.24 from Tuesday’s close.

Private forecaster Frontier Weather said Wednesday morning that its six- to 10-day outlook for March 3-7 calls for below-normal temperatures in the central United States, with mostly normal temperatures in the West and along the East Coast. The firm’s 11- to 15-day outlook covering March 8-12 calls for mostly normal temperatures across the Lower 48.

While allowing that March expiration book-squaring was in play on Wednesday, Citigroup analyst Tim Evans said changes in the weather picture probably dominated the day. “The natural gas market is backing off from its highs on weather updates that look less supportive overall, with the 11- to 15-day forecast showing normal temperatures across most of the continental U.S.,” Evans said. “There is still some cold in the six- to 10-day era to interfere with a possible downtrend in prices, but it now looks as if there will be a warming trend into the second week of March that will also call attention to the approaching end of the winter storage withdrawal season. The funds, who have been heavily short on balance, may be let off the hook if this forecast holds up.”

Evans added that the main barrier to retreat for gas futures, which is also the main upside price risk, remains the large net short positions held by the reportable noncommercial traders. “These fund managers, as a group, appear to be dedicated bears who have added to their net short positions into the rally and seem to have resisted the pressure to cover their positions so far,” he said. “Our simplest take on these speculative short positions is that they represent future buying, that can either cushion the downside if the market weakens or add to the rally in the event that a period of more intense and persistent cold sends them running to the sidelines.”

Other weather forecasters are also seeing a slight warming trend in their computer models. “There were some large changes (mainly to the warmer side) [Wednesday] morning, mainly focused on the middle of the nation,” said Matt Rogers, director at MDA EarthSat. Often various weather models will not agree and “part of the [forecasting] problem hinges on the various ways the models are handling the East Coast storm on days seven and eight, but neither are showing a large, widespread cold outbreak in its wake,” he said in EarthSat’s morning forecast. Rogers rates the confidence in the forecast at four out of a possible 10.

Turning attention to Thursday morning’s natural gas storage report for the week ended Feb. 22, most people within the industry expect the current surplus to the five-year average will continue to contract, if only by a few billion cubic feet. A Reuters survey of 24 industry players produced a range of withdrawal expectations from 139 Bcf to 164 Bcf with an average expectation of a 155 Bcf withdrawal.

Golden, CO-based Bentek Energy said its flow model for the week indicates a withdrawal of 148 Bcf, bringing stocks 19.7% below the five-year high and 5.9% above the five-year average. Bentek said it believes the East region withdrew 99 Bcf while the Producing and West regions dropped 33 Bcf and 16 Bcf, respectively.

The number revealed Thursday morning at 10:30 a.m. EST will be compared with the 145 Bcf withdrawal for last year’s comparable week and the five-year average pull of 141 Bcf.

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