As traders and analysts contemplated the supply/demand balance implications of unprecedented disruptions in the natural gas system over the past week, futures prices hovered close to even in early trading Friday. The March Nymex contract was up 0.6 cents to $3.088/MMBtu at around 8:45 a.m. ET.

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Milder temperatures over the weekend and moderating prices in the physical market could put pressure on futures prices near-term, analysts at EBW Analytics Group said Friday.

Even though cash prices remained elevated in Thursday’s trading, including prices that “would have set record highs” prior to the unprecedented conditions that gripped the market earlier in the week, “much milder weather is expected to arrive by Sunday,” the EBW analysts said. “This is likely to drive prices at most hubs significantly lower, putting further downward pressure on futures.”

Still, as the March contract sold off in Thursday’s session, dropping 13.2 cents, the market effectively “ignored the big picture,” according to the firm.

The deep freeze that plunged into the Lower 48 over the past week has driven “enormous draws” and caused “massive production losses,” the EBW analysts said. This has “reversed the impact of very mild early winter weather. When winter ends, storage will be far below the five-year average, requiring much higher prices to balance the market.”

On Thursday the Energy Information Administration (EIA) reported a 237 withdrawal from U.S. gas stocks for the week ended Feb. 12, a print that disappointed versus consensus expectations but came in much larger than the year-ago 141 Bcf draw and the 142 Bcf five-year average. 

Total working gas in storage stood at 2,281 Bcf as of Feb. 12, down 105 Bcf from year-ago levels and 57 Bcf above the five-year average, EIA said.

Coming off the record cold that settled across the United States during the past week, next week’s EIA report “will be the big one, and the moving parts are plentiful,” according to analysts at Tudor, Pickering, Holt & Co. (TPH).

The firm said it’s modeling a 12 Bcf/d week/week decline in production, with liquefied natural gas demand down 6 Bcf/d and residential/commercial demand up 5 Bcf/d.

“We also saw record Canadian imports, reduced flows to Mexico and a drop in industrial demand as gas was prioritized for essential services,” the TPH analysts said. “Unlike the weather forecasters, we’re almost certainly going to get this one wrong, and early modeling points to a draw of 320 Bcf, but we’ll reserve the right to revise this as data is updated.”

While it’s unlikely that the upcoming report breaks the record 359 Bcf weekly draw reported in 2018, it should “officially move us below the five-year average for the first time since 2019 as the bullish setup continues to deepen,” according to TPH.

March crude oil futures were down $1.19 to $59.33/bbl at around 8:45 a.m. ET, while March RBOB gasoline was up about 1.5 cents to $1.8095/gal.