April natural gas is expected to open 4 cents lower Wednesday morning at $1.70 as traders digest extreme eastern warmth seen in near-term forecasts and heating degree days about half of normal. Overnight oil markets were mixed.

New York-based PIRA sees that with bid week pricing coming in about 50 cents less than February indices, the weak pricing environment is likely to accelerate production declines.

“Much is riding on the demand and supply response to such prices considering the fallout on U.S. and Canadian storage tied to the collapse in heating loads during February,” the firm said in a report. “The South Central will account for about 50% of this month’s overall expansion in the year-on-year U.S. storage surplus.

“The resulting end-February overhang is clearly an impediment standing in the way of a near-term price recovery, especially after considering the South’s increased exposure to Appalachia supply tied to pipeline capacity additions between the regions. Still, given the lack of any draw last March, that surplus is likely to start to contract. Moreover, the acute price weakness now in effect also stands to accelerate U.S. production weakness — even in Appalachia.”

Analysts surmise that Tuesday’s modest gains may have been the result of profit-taking since April couldn’t breach 17 year lows at $1.682. “Some of the buying may have been related to timing expectations for Thursday’s DOE storage report, although the estimates for 40 Bcf or so in net withdrawals would still fall short of the 137 Bcf five-year average for the week ended Feb. 26,” said Tim Evans of Citi Futures Perspective in closing comments Tuesday.

“The updated temperature forecast was modestly warmer than a day ago, but mostly shifted heating demand between the weeks ahead.” Evans forecasts below average withdrawals in the weeks ahead culminating in the first injection for the week of March 16 at 13 Bcf. By that time the year-on-five-year surplus is expected to balloon to 850 Bcf.

Good news for market bulls in that the El Nino in place since November is finally dissipating. Wunderground.com reported that “The National Oceanic and Atmospheric Administration (NOAA) projects this El Nino to continue weakening into spring and transition to neutral conditions by late spring or early summer 2016. The odds of a La Nina event for 2016-2017 will be going up as autumn approaches.

The weekly sea surface temperature reading, taken within the Nino 3.4 region near the equator, is at 2.1 degrees C above average, which is down substantially from the previous week’s 2.4 degrees C above average. The +3.1 degrees C peak recorded in late November 2015 was the highest weekly value observed during any El Nino event in NOAA’s records going back to 1950.

In overnight Globex trading April crude oil fell 41 cents to $33.99/bbl and April RBOB gasoline rose a penny to $1.3171/gal.