An increase in demand projections overnight from one of the major weather models helped natural gas futures extend their recent gains in early trading Tuesday. After surging 15.6 cents in Monday’s session, the February Nymex contract was up 4.7 cents to $2.649/MMBtu at around 8:40 a.m. ET. March was up 2.7 cents to $2.625.

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The Global Forecast System (GFS) added 10 heating degree days (HDD) to its projections overnight, while the colder European model dropped 3 HDD, bringing the models into better agreement, according to NatGasWeather.

“The timing of major features to impact the U.S. held, with strong national demand Wednesday through Friday as cold air spreads across the northern and eastern U.S., followed by weaker demand” late this weekend through Feb. 4, when “much of the U.S. warms above normal besides areas of the West and East,” NatGasWeather said.

“…What’s now most important is if cold air arriving into the Rockies and Plains Feb. 3-4 can spread eastward Feb. 5-8,” the firm added. “This is where the GFS trended colder overnight,” but the model “remains stronger with a warm ridge over the East compared to the European model that weakens it.”

Viewed as a whole, winter temperatures so far this season have undoubtedly proved a disappointment for natural gas bulls. Looking at the November to January time frame, this winter is on track to wind up as one of the warmest in decades, according to Wood Mackenzie analyst Eric Fell.

“This winter, from November to January, will be the fourth mildest in the last 30 years and the third mildest in the last 10 years if the forecast for the remainder of January actualizes,” Fell said in a note to clients early Tuesday. “With the current forecast, gas-weighted HDD will actualize 220 below the prior 30-year and 165 below the prior 10-year averages, respectively.”

Those degree day totals correspond to around 300-400 Bcf less weather-related demand versus historical norms, Fell said.

As for the technical outlook on recent price action, ICAP Technical Analysis analyst Brian LaRose called Monday’s rally an “impressive reversal” and said natural gas prices could have bottomed.

“The question now, can the bulls promptly build on Monday’s price action?” LaRose asked. “If they can, we will have good reason to entertain the possibility of an early seasonal bottom.” For the March contract, “peg $2.630, $2.678 and $2.775-2.794-2.817 as the next obstacles the bulls will have to conquer to further their case.

“Still see the risk of revisiting the late December lows if the bulls are unable to clear these obstacles.”

March crude oil futures were trading 24 cents higher to $53.01/bbl at around 8:40 a.m. ET, while February RBOB gasoline was up about 1.9 cents to $1.5802/gal.