Coronavirus slowdown fears and warmer-trending weather data had natural gas futures down sharply early Wednesday, nearing a key support level. The April Nymex contract was off 9.7 cents to $1.632/MMBtu at around 8:30 a.m. ET.

The front month appears poised for a re-test of support at $1.610, and if it were to break, prices could drop to $1.490 or lower, according to analysts at EBW Analytics Group. The firm attributed the early sell-off Wednesday in part to “another bearish weather forecast shift” but pointed to coronavirus demand destruction as the market’s primary concern at the moment.

Efforts to contain the spread of the virus have led to “increasing fear that much of the U.S. will soon be put on lockdown,” the EBW analysts said. “Equity futures are nosediving...A lockdown could crush energy demand, causing cash market prices to crater. Crude prices are plummeting. Downward pressure on natural gas could be intense.”

A second straight day of warmer trending weather data shifted the 15-day forecast back to warmer-than-normal overall, according to Bespoke Weather Services.

“This is not all that different than what we have seen the last few months, where we see models latch on to a potential colder period, or at least a normal period, only to see the cold weaken as we progress forward in time,” Bespoke said. “...This increases confidence that we will remain on the warm side as we move into the early part of April.

“It will not really move the demand needle significantly...but we will actually begin to pick up some minor cooling demand in parts of the South the longer we run above to much above normal levels.”

Meanwhile, looking ahead to this week’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 5 Bcf withdrawal. The firm noted daily readings of cross-border flows into Mexico trending around 5.7-5.9 Bcf/d last week.

“Quicker flows have been supported by a recovery in NET Mexico volumes to pre-Sur de Texas-Tuxpan levels of 2 Bcf/d (up 0.2 Bcf/d month/month),” Energy Aspects said. “Deliveries into Sistrangas via Monte Grande have also averaged higher, at 0.2 Bcf/d.”

April crude oil futures were down $2.39 to $24.56/bbl at around 8:40 a.m. ET, while April RBOB gasoline was off fractionally to around 70.7 cents/gal.