A much warmer forecast over the weekend saw natural gas futures drop off sharply from Friday’s levels after gapping lower Sunday. Shortly before 8:40 a.m. ET Monday, the December contract was down 9.7 cents to $2.591/MMBtu.

Over the weekend, the Global Forecast System (GFS) dropped a “considerable amount” of heating degree days (HDDs) from the outlook compared to Friday’s expectations, according to NatGasWeather. Both the European model and the GFS lost another 9 HDDs overnight, the forecaster said.

“All datasets continue to show numerous weather systems/cool shots into the U.S. in the weeks ahead; they just aren’t as cold as the data showed on Friday,” NatGasWeather said.

In the wake of warmer forecast trends over the weekend and early Monday, Friday’s settlement at $2.688 “could become a near-term ceiling” for the front month, analysts at EBW Analytics Group said.

Demand was added for the Nov. 29-Dec. 5 time frame, but “temperatures generally remain close to seasonal norms. With no significant cold anomalies in the forecast, we expect the year/year storage surplus to grow by 70 Bcf over the next three weeks, pushing natural gas prices significantly lower,” the EBW analysts said.

The potential remains for colder weather to return around the second week of December, according to the firm.

“If it does not, however, the January contract could test support in the mid- to lower $2.40s after it becomes the front month,” EBW said.

As for the supply picture, Lower 48 production is showing signs of recovering from freeze-offs last week but remains “well below” record highs prior to the recent cold, according to Genscape Inc. Production averaged about 93.7 Bcf/d over the weekend, the firm said.

“That is about 0.4 Bcf/d above the prior week’s daily average and nearly 0.7 Bcf/d above the trough” last Tuesday when frigid temperatures “curtailed output from Northeast, Texas, Permian and Rockies producing areas,” Genscape senior natural gas analyst Rick Margolin said. “Prior to the freeze-offs production set a record high of 94.33 Bcf/d on Nov. 9.”

December crude oil futures were down 54 cents to $57.18/bbl just before 8:40 a.m. ET, while December RBOB gasoline was down about 2.0 cents to $1.6146/gal.