Coming off a rally in the previous session, warmer trends in the overnight weather data sapped the momentum from the natural gas futures market and sent prices several cents lower in early trading Wednesday. The March Nymex contract was down 3.0 cents to $1.842/MMBtu at around 8:30 a.m. ET.

The overnight guidance trended warmer, especially the European dataset, which showed weaker upper level ridging around Alaska that would reduce the amount of cold air pouring into the United States later this month, according to Bespoke Weather Services.

“We had positioned our internal forecast on the warmer side already and so did not make much of a change this morning...but we would suggest that risks are to the warmer side in the current 11-15 day, as models still seem to be stuck in the mode of over-forecasting cold in the extended periods,” Bespoke said. “The cold that does come still is likely to be focused more in the central/western states, with the East/Southeast staying warm, but the intensity of the cold may progress a little weaker as we roll forward.”

Analysts at EBW Analytics Group estimated a loss of around 30 Bcf of natural gas demand based on the latest shift in the European model.

Total gas-weighted heating degree days “are still above-normal for several days starting on Valentine’s Day, but the intensity is much weaker than forecast yesterday,” the EBW analysts said. “...Notably, however, 42% of the ensemble members still call for a colder solution. Pipeline scrapes also indicate production has declined to just 90.5 Bcf/d, providing further support.

“The next few model runs will be key. Prices are poised to test either end of the recent trading range depending upon how the models trend.”

From a technical standpoint, ICAP Technical Analysis analyst Brian LaRose said following Tuesday’s trading there were “some signs of life” from the natural gas market.

“But will it be enough to translate into a bottom?” LaRose said. “Would need both the .146 and .236 retracements at $1.965 and $2.064 exceeded to entertain a recovery rather than just another pause in the downtrend.

“Still peg $1.730, $1.679-1.677 and $1.611 as the immediate steps to the downside if the bulls cannot gain some traction and lift off from here.”

March crude oil futures were trading $1.41 higher at $51.02/bbl at around 8:30 a.m. ET, while March RBOB gasoline was up 3.6 cents to $1.4792/gal.