July natural gas was set to open a couple pennies lower Wednesday morning as the market continued its search for signs of the onset of summer cooling demand. Overnight oil markets were down.

The overnight decline came after a 17-cent drop Tuesday that saw July settle at $3.145. Traders factored in a cooler medium-term forecast and estimates showing strengthening production over the weekend.

“The entire forward curve was down with the front underperforming the back after cooler weather forecasts in the eight- to 14-day period and slightly looser supply/demand balances,” wrote NatGasWeather.com in a morning note to clients. “More than the real impact of losing a few [cooling degree days], what scares the market right now is the potential absence of hot weather during the summer period, which has yet to start.”

NatGasWeather.com estimated that U.S. Lower 48 production averaged a little under 72 Bcf/d over the weekend “before reaching 71.2 Bcf/d on Monday and 71.5 Bcf/d [Tuesday], the highest multi-day average value for the year…With Mexican export at 4.1 Bcf/d and LNG [liquefied natural gas] export at 1.7 Bcf/d, the balance, although loosening, should provide a floor to any huge collapse unless we were to witness a sizeable production recovery.”

Natural gas analytics firm Genscape Inc. estimated weekend production exceeding 72 Bcf/d, just the second time its production estimate has surpassed that threshold since early March.

“On Friday…estimated production for the Northeast set a new record high at 23.14 Bcf/d, and regional volumes stayed above 23 Bcf/d through the weekend,” Genscape said in a note to clients. “Production has been on the rise in each of the Northeast subregions, but West Virginia’s volumes on the 26th were record high. Gulf region production hit a 70-day high with gains offshore and in North Louisiana.

“Maintenance season is still very much in effect…so the daily production numbers will continue to be volatile.”

The bears still have some work to do after yesterday’s losses, according to Brian LaRose of ICAP Technical Analysis.

“Starting to see evidence of a major trend shift throughout the forward curve,” LaRose told clients Wednesday morning. “Only problem is, flat price is still above critical support at $3.106-$3.084-$3.064. So bears are not out of the woods just yet. Take out support, then we can label $3.431 as the top of a spring-to-summer advance and focus on our targets for a summer-to-fall decline.

“Hold support instead and we will be forced to reconsider $3.431 as the top tick.”