Futures and next-day natural gas prices took the trajectory of skydivers jumping from a plane in Monday's trading. If a falling screen weren't enough, physical traders had the extra motivation of 20-plus degree warmups over the next two days in major eastern markets.

The NGI National Spot Gas Average tumbled 64 cents to $3.11, and all points with the exception of one unchanged location were down by deep double-digits and in some cases by multi-dollars. Overnight weather models moderated and sent futures weather bulls running for cover. At the close February was down 18.2 cents to $3.103 and March was off 17.5 cents to $3.113. February crude oil collapsed $2.03 to $51.96/bbl.

February futures are now 80 cents less than the day the January futures expired, setting a benchmark for January index deals at $3.930. Buyers who bought at index are "probably not too happy," said a Houston pipeline veteran. "As long as you sold index you are happy, but if you roll the dice and pick the wrong way of course you are not going to be happy about it."

Those on the long side of the physical market weren't very happy Monday as temperature forecasts in major eastern market centers were expected to surge 20 degrees or more in the next two days. AccuWeather.com predicted Boston's Monday high of 22 would rise to 37 Tuesday and reach 48 by Wednesday, 12 degrees above normal. Philadelphia's Monday peak of 26 was expected to reach 39 Tuesday and 50 by Wednesday, 10 degrees above normal.

Next-day prices wasted no time taking the hint. Gas on Tetco M-3 Delivery fell $2.97 to $3.19 and gas headed for New York City on Transco Zone 6 was quoted $4.53 lower at $3.32.

Even greater declines were seen in New England. Gas at the Algonquin Citygate skidded $3.94 to $5.15 and deliveries to Iroquois Waddington changed hands $4.48 lower at $4.00. Parcels on Tennessee Zone 6 200 L fell $4.28 to $5.57.

Drops at other major trading centers were not quite as severe. Gas at the Chicago Citygate shed 25 cents to $3.08 and deliveries to the Henry Hub dropped 20 cents to $3.12. Gas on El Paso Permian lost 25 cents to $2.89 and packages priced at the SoCal Citygate came in 7 cents lower at $3.29.

Longer-term weather forecasters were looking into their crystal balls for signs of cold normally expected this time of year. Weather models did moderate overnight and hinted at returning cold.

"In the past 24 hours, the models have lost about 15-20 heating degree days nationally over the forecast period [next two weeks], which was enough to wipe away the slight demand gain estimates from yesterday morning and then pile on more significant losses," said Commodity Weather Group in its Monday morning outlook.

"The final piece of Arctic air later this week seems to finally get resolved on the models (to lesser impact now) and then the pattern roars warmer, thanks to cold troughing around the Alaska area. Since this is the coldest time of year climatologically, the impacts of a bigger warm pattern can be quite large.

"This is pushing January toward one of the warmest outcomes of the 2000s. The end of the European ensemble does show potential pattern changes, with 60% of its members getting rid of the Alaska trough by the end of the 11-15 day. If true, it would be the first domino to fall to bring the pattern back colder by late January, but confidence is really low given no consistency yet on these themes," said Matt Rogers, president of the firm.

Risk managers acknowledge upside risks but are positioning from the short side of the market. "If we continue to see colder than normal temperatures for the balance of the winter, we could see the gas market continue to test the $4 level for the next couple of months," said Mike DeVooght, president of DEVO Capital Management in a weekend note to clients.

"If temperatures start to trend warmer, we could very well see gas back at $3 by the end of the heating season. Looking forward into mid 2017/early 2018, we feel the gas market is going to have a difficult time holding above the mid $3 range as takeaway capacity out of the Marcellus and Utica expands.

"On a trading basis, we will approach the market from the short side as we position for the New Year." DeVooght advises trading accounts to hold a short February futures position from $3.70, yet end users are counseled to stand aside.

Producers and physical market longs should hold the remainder of an August 2016-July 2017 put strip at $2.70 offset by the sale of a $3.50 call at flat. Alternatively one could hold a $2.75 put and sell a $3.75 call paying 7 cents, he said.