Coming off a sharp sell-off the day before, natural gas futures continued to grind lower in early trading Wednesday as the latest forecasts still showed a hot, late May pattern backing off by the start of June. The June Nymex futures contract was down 2.4 cents to $2.589/MMBtu shortly after 8:30 a.m. ET.

The weather outlook remained mostly unchanged in the overnight data, with the Global Forecast System adding a couple Bcf of demand and the European model dropping a couple Bcf, according to NatGasWeather.

“No major changes overall as hot conditions will continue across the southeastern U.S. into the middle of next week with widespread highs of 90s for strong power burns,” the forecaster said. “However, the data held a rather bearish setup for the start of June, with high pressure weakening, easing heat across the southern U.S.

“...Stronger demand trends could certainly occur over time, like what’s occurred the past several weeks, although that would need to show up in the weather data soon. With prices selling off yesterday and back under $2.62, bulls appear to have ceded momentum back to bears, at least temporarily.”

The bulls took prices as high as $2.70 on Monday before the front month sold off sharply in Tuesday’s session, a “sudden reversal” that occurred in the absence of any major shift in forecasts, noted EBW Analytics Group CEO Andy Weissman.

“Instead, it was sparked by a sharp, 2.0 Bcf/d increase in U.S. production (reversing the previous day’s reported decline) and technical trading, driven by computer algorithms that began Monday afternoon after the June contract touched resistance at $2.70,” Weissman said.

“Profit-taking ahead of tomorrow’s weekly storage report could help support prices during today’s trading session,” but with weak demand and “a string of monster injections looming,” futures could post losses over the next 10 days.

Looking at the technicals, since the end of winter the front month has traded in a range from around $2.45-2.50 up to $2.90, according to Powerhouse Vice President David Thompson.

“We’re basically in the middle of that range,” he told NGI. “We’ve clearly been in a small uptrend since the second half of April...From a seasonal/technical point of view, you would tend to expect prices to start moving higher at this point in time.”

The next resistance level bulls would probably need to punch through to confirm a move higher is $2.73, according to Thompson.

June crude oil futures were down 88 cents to $62.25/bbl just after 8:30 a.m. ET, while June RBOB gasoline was off fractionally to $2.0101/gal.