Natural gas futures pared their losses in early trading Tuesday as production estimates pointed to a sizable day/day drop in supply, though analysts continued to see downside on moderating summer temperatures. 

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Coming off a 47.5-cent decline in the previous session, the September Nymex contract was up 14.2 cents to $7.731/MMBtu at around 8:50 a.m. ET.

Estimates from Wood Mackenzie as of early Tuesday showed a roughly 2.0 Bcf/d day/day drop in domestic production, with total output down to around 96 Bcf/d.

Declines included a drop of around 850 MMcf/d in production flowing out of Texas and a roughly 590 MMcf/d drop in Northeast supply, Wood Mackenzie analyst Laura Munder told clients. Production drops were also observed for the Permian New Mexico (down around 150 MMcf/d) and the Rockies (down around 120 MMcf/d), the analyst said.

“The declines are concentrated in areas where there are some maintenance/operational issues underway,” Munder said. “However, revisions are expected in tomorrow’s data sample.”

Meanwhile, projections continue to point to declining cooling degree day (CDD) totals and moderating weather-driven demand in the weeks ahead, according to EBW Analytics Group.

“Weekly demand could lose 17 CDD and 3.2 Bcf/d next week,” EBW senior analyst Eli Rubin said. “By the end of the month, warm anomalies will be concentrated in the Pacific Northwest, with mild weather across Texas, the South Central, Southeast and parts of the Midwest sapping cooling loads.”

A decline in “recently robust” production numbers as of early cycle nominations Tuesday was coinciding with “a brief bounce” in prices following “yesterday’s steep decline,” the analyst observed.

However, “if output is revised higher, another test of technical support may be likely for Nymex gas,” Rubin added.

A key focus for Tuesday’s session will be whether bears can continue to push prices lower after they “came close to cracking the 50-day moving averages,” according to ICAP Technical Analysis analyst Brian LaRose.

“They could not get the job done. So the question for Tuesday, did they run out of time or out of steam,” LaRose said.

The analyst pegged $7.372, $7.227, $7.016, $6.888 and $6.611 as the next downside targets to focus on should bears succeed.