Natural gas futures hovered close to even early Wednesday as traders appeared to be keeping their powder dry ahead of potentially the coldest stretch of the winter season so far. The February Nymex contract was up 1.4 cents to $4.297/MMBtu at around 9 a.m. ET.

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The February contract went as high as $4.385 in after-hours trading in what EBW Analytics Group senior analyst Eli Rubin characterized as a “sideways” pattern.

Traders are taking a “wait-and-see approach” that suggests “a lack of confidence in how prices will react to frigid near-term weather, and few concerns regarding the still-robust storage trajectory,” Rubin said. “We believe the market is moderately underestimating the extent of near-term cold and its effect on production freeze-offs and on withdrawals, and note that upside risks for the February contract remain larger than downside potential.”

Prices retreated from the after-hours highs even as forecasts overnight held steady in predicting the most intense cold of the season so far, according to NatGasWeather.

Given the extent of the frigid temperatures in recent forecast trends, which included expectations for a chilly pattern over the northern and eastern United States for late January into early February, NatGasWeather said it was “a little surprising prices haven’t gained this week.”

Starting Thursday and continuing into next week, national demand will be “very strong” before “easing slightly” during the Jan. 29-Feb. 2 time frame, according to the firm.

“If prices fail to rally soon, this would seem problematic for the bullish case since sustained cold into the U.S. has been elusive for much of the past decade,” NatGasWeather said.

Looking ahead to Thursday’s Energy Information Administration (EIA) storage report, NGI’s model predicted a 195 Bcf withdrawal for the week ended Jan. 14. Last year, EIA recorded a 179 Bcf withdrawal for the period, while the five-year average is a pull of 167 Bcf.

As for the extent of upcoming withdrawals beyond the current week’s EIA report, EBW estimates as of early Wednesday that conditions would come in 16 Bcf/d tighter versus five-year norms over the next 15 days.

Rubin cautioned that “any upside potential” for prices “may be short-lived, with bullish potential more concentrated in the February contract and March likely to rapidly return any short-term gains” once it becomes the prompt month.