April natural gas is expected to open 3 cents higher Wednesday morning at $4.49 as forecasters see some risk to colder than expected temperatures later in the six- to 10-day period. Overnight oil markets were mixed.

Although overnight weather forecasts turned slightly warmer, the risk appears weighted to cooler temperatures later. In its morning six- to-10-day outlook, WSI Corp. predicts below to much below normal temperatures east of a broad arc extending from Montana to South Texas. “[Wednesday’s] six-10 day period forecast has trended slightly warmer over the East when compared to yesterday’s forecast. Confidence is considered near average standards as models show good large-scale agreement but uncertainty increases mid period in association to the development and track of a low pressure system over the East.

“Temperatures could run colder than forecast over the East late in period if a potential developing Nor’Easter low pressure system produces a significant snow pack over the East states and provides a scenario that favors strong traditional cooling later in the period.”

Analysts Tuesday were a little perplexed to explain April’s 8 cent slide. “The natural gas futures had one of those days when the prices went one direction and temperature outlook went another, an indication that there’s some debate in the market whether Monday’s gains were justified or whether the overall price level is warranted,” said Tim Evans of Citi Futures Perspective in closing comments to clients.

“The bearish case comes down to an assessment that the market is top heavy with speculative long positions at a time of declining seasonal heating demand. The bullish case is that the market continues to become tighter on a seasonably adjusted basis, with a growing year-on-five-year average deficit that normally correlates with rising prices over the intermediate term.”

Last year, 74 Bcf was pulled from storage and the five-year average is for a 30 Bcf withdrawal. Evans forecasts that Thursday’s storage report will see a 63 Bcf pull, and by April 4, the year-on-five-year deficit will have mushroomed to 1,046 Bcf, and total storage at 776 Bcf, the lowest since 2003. “We continue to view this as sufficiently tight to push natural gas futures back up to the $5.00 mark or somewhat beyond that level, although we have to admit that the market has struggled over the past  month to translate colder than normal temperatures into higher prices.”

In overnight Globex trading April crude oil rose 30 cents to $100.00/bbl and April RBOB gasoline slipped 2 cents to $2.8852/gal.