Natural gas futures were racing higher in early trading Wednesday as winter weather risks, including intensifying cold expectations for Texas, drove continued volatility against a backdrop of rapidly falling inventories. The March Nymex contract had exploded to $5.349/MMBtu as of around 8:45 a.m. ET, up 59.8 cents from the previous settle.

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Compared to 24 hours earlier, the outlook from major weather models showed colder conditions in Texas in the immediate term, thus increasing risks for production freeze-offs, according to EBW Analytics Group senior analyst Eli Rubin.

Models also advertised additional heating demand expectations associated with cold in the Midwest out in mid-February, the analyst said.

“Nymex futures are spiking higher this morning, with March crossing key technical resistance at $5.12 to materially increase the chances of surging towards $5.50,” Rubin said. “With price inelastic supply and demand, significant further gains cannot be ruled out.”

“…The primary near-term catalyst remains the extent of production freeze-offs, with the most likely scenario of manageable freeze-offs and sufficient winter supplies likely to eventually lead Nymex futures lower.”

For now, however, the market is likely to see “extreme price volatility” that could see the March contract continue to climb before eventually receding, according to Rubin.

Bespoke Weather Services viewed the updated weather outlook as more bullish than what the net demand changes in the 15-day projection period would indicate. 

Both the American and European modeling implied “continued cold beyond day 15,” the firm said. The pattern as of early Wednesday suggested this February could “easily” deliver more cold than the prior five-year average.

“The risk for additional cold in the longer-term forecast has natural gas prices again screaming higher,” Bespoke said. “…As we discussed the last couple of days, we feel the focus of the market is not so much on Texas the next few days, but the fact that we are seriously drawing down storage levels, and more cold will only add to this issue, making it tough to refill to comfortable levels by the end of the injection season.”

This week’s Energy Information Administration print would appear unlikely to calm any nerves when it comes to storage adequacy fears.

NGI’s model predicted a hefty 286 Bcf pull from U.S. stockpiles for the week ended Jan. 28. A print of that magnitude would dwarf the five-year average pull of 150 Bcf.