After trying and failing to rally during the previous session, natural gas futures were trading sharply lower early Wednesday amid a “much warmer” outlook from the latest guidance. The February Nymex contract was off 5.6 cents to $2.131/MMBtu at around 8:40 a.m. ET.

It seemed the major weather models had locked in on a transition to a sustained period of colder weather later this month, but in recent runs the European model has “abruptly reversed course” by showing a five-day stretch of above-normal temperatures starting late next week, according to analysts at EBW Analytics Group.

“This morning’s European model run continues to show this shift,” the EBW analysts said. “Cold weather is still predicted early next week and starting again on Day 14. Further, the American and Canadian models predict that warmer weather will last just two to three days. Unless the European model changes course again later today or tomorrow, however, the rally most likely is over, and the downside risks later in the withdrawal season are greatly increased.”

Bespoke Weather Services described the latest forecast as “much warmer” heading into Wednesday’s trading.

“Large warmer changes were made to the forecast this morning, with much less cold in the Midwest and East from the middle of next week into the following week,” the forecaster said. The European dataset led with the change but with its American counterpart “heading in a similar direction.”

On Tuesday the “the high latitude pattern did not look supportive for notable cold air transport into the U.S., and sure enough, models keep trending weaker,” Bespoke said. “Yes, there is still a material shift in the pattern from the very warm regime of the last several weeks to a more normal demand pattern the next two weeks, but models once again appear to have been overdone on cold.”

There are also risks for the pattern to “tilt back warmer in early February,” according to Bespoke.

From a technical perspective, in his daily market profile INTL FCStone Financial Inc. Senior Vice President Tom Saal has pegged weekly break down targets for the February contract at $2.117 and $2.071. Those levels respectively represent 50% and 100% of the weekly initial balance from $2.163 to $2.255.

February crude oil futures were trading 7 cents lower at $58.16/bbl at around 8:40 a.m. ET, while February RBOB gasoline was up fractionally at $1.6551/gal.