Physical natural gas for Wednesday delivery took on a little of the tarnish left behind in Monday’s 22-cent drop of November futures.

The NGI National Spot Gas Average tumbled 8 cents to $2.14, and eastern points led much of the charge lower with a drop of 19 cents. Weak New England power pricing prompted declines of close to $2, and major trading points, on average, saw prices flat to a nickel or more lower.

Futures trading was wild and woolly, with the spot November contract probing below $2 for the first time since the spring of 2012 before staging a comeback. At the close, November had risen 3.0 cents to $2.092 and December had inched higher by 0.8 cent to $2.361. December crude oil dropped 78 cents to $43.20/bbl.

Longer term, traders are taking advantage of the futures drop. “I was thinking that after Monday’s drop traders would put up $1 print, and they did, but the RSI [Relative Strength Indicator] got down to 13.2 and we rallied,” said a California trader.

“With a 27-cent spread from November to December, it’s looking pretty bearish. I was telling some guys to roll at 22 to 23 cents and they did, so we gave up about 4 to 5 cents. Winter has to come to change things. Some cold would have to come from the Great White North to counteract the El Nino.

“I have a hard time thinking the market will get to $1.50 unless crude tries a new low, which was $37.75/bbl. So if you bust through that, you go back to the February 2009 number of $32.70/bbl, which is based on the idea that there is going be a glut of crude world wide. This industry always gears up too fast and then they have to cut everyone’s tail.

“I’m buying 2017, 2018 and 2019 calendar [strips] and loading the boat for the long term. I think $1.50 holds. Crude and natural gas have to go down together,” he said.

In the near term, however, overnight weather model runs continued to shed degree days. In its Tuesday morning report, Commodity Weather Group said the “Latest 0z data again lose another handful of degree days as warmer trends continue to dominate the scene. The European [Model] is still the warmest, but the American ensemble has shifted stronger, too over the last few cycles, especially for the 6-10 day. The 11-15 day looks more variable with even the European clusters showing late-period cooler Eastern risks, but the upper-level pattern does not show anything strong or durable.” forecasts the high in Chicago and New York next Tuesday will reach 66, 8 degrees above normal for Chicago and 6 degrees for New York.

Jim Ritterbusch of Ritterbusch and Associates cautioned against trying to pick a bottom in this market. “A huge expansion in carrying charges just ahead of contract expiration provides a major bearish pricing signal within any market, and gas is no exception. This downside breakaway in the prompt month is sending off strong signals of an oversupplied market that is apt to see additional surplus expansion given extension of mild temperature trends that are now widely expected to stretch well into the second week of November.

“This should extend the timing of seasonal supply peak to about the middle of next month, with a season-ending stock exceeding the psychological bearish level of 4 Tcf. So until some cold temperatures begin to show up within the short term one to- two-week views, this market would appear to possess some further downside risk, while tomorrow’s passing of the November contract could relieve some bearish price pressures as December futures will be forced to discount some colder air during the coming month.”

As desolate as the price landscape may appear at the moment, there is hope. Analysts at Bank of America Merrill Lynch (BofA) said they remain convinced of a “fundamentally positive outlook” by the second half of 2016 and beyond. Goldman Sachs had expected U.S. prices to average $2.70/MMBtu in the fourth quarter, but last week it said prices already had fallen below that price.

A lot of the issue has to do with continued strong output from the Northeast, analysts said. However, “lower prices this winter also imply less production in the future,” BofA said. “Output in the Northeast has already failed to keep up with growth seen over the past four years, a function of local basis prices trading in a weak 80 cents to $2.00/MMBtu range since end of March. The lack of growth stands in contrast with the ramp-up of new pipeline takeaway capacity that has already happened throughout this year.

The physical market took its biggest hits in New England as the power price environment weakened. Intercontinental Exchange reported that on-peak power at the ISO New England’s Massachusetts Hub shed a stout $8.50 to $54.25/MWh. On-peak power at the PJM West Hub managed to rise $1.43 to $36.48/MWh.

Next-day deliveries to the Algonquin Citygate fell $1.04 to $5.51, and gas at Iroquois, Waddington fell 22 cents to $2.81. Deliveries to Tenn Zone 6 200L came in $2.03 lower at $3.97.

Mid-Atlantic gas also suffered some bruises. Gas on Tetco M-3 Delivery was quoted 36 cents lower at $1.40 and gas on its way to New York City on Transco Zone 6 skidded 17 cents to $1.99.

Major trading centers were mixed to lower. Gas at the Chicago Citygate changed hands a nickel higher at $2.36 but gas at the Henry Hub was seen at $2.07, down 7 cents. Parcels on El Paso Permian added a penny to $2.08, but gas at the SoCal Citygate fell 7 cents to $2.36.