Coming off a sharp decline in the previous session, natural gas futures retreated further in early trading Wednesday as analysts pointed to technical factors, more so than fundamentals, to explain recent price action. The July Nymex contract was off 4.6 cents to $3.194/MMBtu at around 8:50 a.m. ET.

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The July contract fell 11.2 cents the previous session, a slide that occurred despite what analysts at EBW Analytics Group viewed as a lack of any major change in the fundamentals outlook.

The front month initially tried to move higher in Tuesday’s session, but eventually “the roof caved in, with large funds driving prices down sharply on heavy volumes,” the EBW analysts said. “Notably, the up and down swings occurred even though near-term supply/demand fundamentals were largely unchanged — a clear indicator that technical factors and machine-driven algorithmic trading were moving the market.

“With the shift to a hotter, more summer-like weather pattern nationally still more than a week away, technical traders are likely to continue to try to drive natural gas prices down. Support could be tested at $3.15-3.20, or potentially lower.”

As for the latest forecast outlook, Bespoke Weather Services observed little day/day change in its latest projections early Wednesday.

The pattern remains “hotter-biased” even with “some cooler weather into the Midwest and East at times, as western heat, plus hotter temperatures down in Texas, is enough to offset the cooling,” Bespoke said. “We remain on pace to come close to record hot levels for June as a whole” in terms of national gas-weighted degree days, “with the expectation that the hotter bias of the pattern rolls on into July.”

On the tropical weather front, the National Hurricane Center as of early Wednesday warned of a 70% chance for a disturbance near southern Mexico to develop into a tropical cyclone over the next 48 hours. The storm was expected to begin moving northward on Thursday, bringing heavy rains to parts of the northern Gulf Coast on Friday, according to the forecaster.

As of Wednesday the storm looked to be “weak” and “basically just a rainmaker, with the bulk of the rain targeting Louisiana over to the Florida panhandle,” Bespoke said. “Expectations are for another active season this year, which could play a role in muting heat should additional storms threaten the U.S. coastline.”

Looking ahead to Thursday’s Energy Information Administration (EIA) report, a Bloomberg survey early Wednesday showed a median estimate for a 70 Bcf injection for the week ended June 11. Response ranged from 65 Bcf up to 76 Bcf.

NGI’s model predicted a 74 Bcf injection for this week’s report. Last year EIA recorded an 86 Bcf build for the similar week, and the five-year average is an injection of 87 Bcf.

July crude oil futures were trading 22 cents higher to $72.34/bbl at around 8:50 a.m. ET, while July RBOB gasoline was down about 1.7 cents to $2.1536/gal.