Like the sound of air escaping from a tire, next-day natural gas prices fell Monday across nearly all points followed by NGI. Demand-driven declines were greatest in Appalachia and the East, and the NGI National Spot Gas Average skidded 8 cents to $2.70.

Modest gains in California and flat pricing across the Rockies was no match for declines along the Eastern Seaboard, where prices fell by close to a half dollar at some points.

Futures traders took a close look at near-term weather forecasts and noted a change to just seasonal patterns and sold. At the close August had dropped 7.1 cents to $2.899 and September eased 7.9 cents to $2.882. September crude oil rose 57 cents to 46.34/bbl.

Forecast power demand for Tuesday fell from New England through the Mid-Atlantic. ISO New England forecast that on-peak power demand Monday of 15,750 MW would fall to 15,500 MW Tuesday before climbing to 17,250 MW Wednesday. The New York ISO expected peak load Monday of 22,727 MW to drop to 21,533 MW Tuesday before rising to 22,326 MW Wednesday. The PJM Interconnection predicted peak load Monday of 45,720 MW would slide to 42,545 MW Tuesday and 40,490 MW Wednesday.

Gas at the Algonquin Citygate tumbled 39 cents to $2.13 and deliveries on Transco Zone 6 to New York City plunged 46 cents to $2.20. Packages on Tetco M-3 Delivery were quoted 23 cents lower at $1.90 and gas on Dominion South shed 15 cents to $1.85.

At the Chicago Citygate Tuesday packages came in 7 cents lower at $2.81 and deliveries to the Henry Hub changed hands 7 cents lower at $2.96. Gas on Northern Natural Demarcation fetched $2.78, 3 cents less than Friday and gas on El Paso Permian rose 1 cent to $2.66.

Western quotes were mostly lower. Kern River traded down 2 cents at $2.66, but El Paso S Mainline gained 2 cents to $2.95. Parcels at the PG&E Citygate eased a penny to $3.30 and gas priced at Malin declined 3 cents to $2.72.

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Eastern weather was forecast to take a sharp turn cooler. “A brief blast of September-like air will follow the rounds of thunderstorms and torrential downpours in the northeastern United States early this week,” said meteorologist Kyle Elliott.

He noted that skies opened up and thunderstorms slammed the mid-Atlantic states on Sunday and Sunday night, and “many locations in the mid-Atlantic received 1 to 3 inches of rain through Sunday night, but localized rainfall amounts of up to 6 inches turned roadways into rivers and streams into raging torrents of water.

“Into Monday night, while drenching rain exits New England, another round of heavy and locally gusty thunderstorms will affect part of the mid-Atlantic.”

Traders see further declines ahead. “The market feels heavy, and I think there is more to the downside,” a New York floor trader told NGI. “I think a lot of minds have been changed, and it could test the upper $2.60s.”

August natural gas opened 3 cents lower Monday morning at $2.94 as overnight weather models lowered temperature forecasts to seasonal levels.

Cooler temperatures in the near term are expected in key energy markets. “Much of the change in the forecast in each period is related to an active storm pattern in the Pacific, with the result being cooler adjustments across the Eastern Half,” said MDA Weather Services in its six- to 10-day morning report to clients. “Temperatures are forecast to average near normal from the Plains points east during this time frame, with cooler leanings accompanying high pressure into the Midwest early and again late in the period — and models suggest temperatures could still be cooler under these highs.”

Their data shows that “above normal temperatures will be the story in the West, where a few days of MA’s are forecast in California from mid-late period under a strengthening ridge.” Risks to the forecast are in the cooler direction in the Eastern Half, “where models project more slightly below normal coverage. GFS [Global Forecast System] is stronger with ridging over the Southwest, a hotter risk for there.”

Risk managers noting the glaring failure of the market to respond to last week’s supportive storage data and a general pattern of above-normal temperatures say it’s time to consider lower prices. “With the second failure to rally above the $3.10 level, especially with the warmer than normal temperatures, there is a good chance we can revisit the $2.80 – $2.85 level in the near future,” said Mike DeVooght, president of DEVO Capital. “On a trading basis we will hold current hedge positions and will stand aside for speculators.”

Others are more bullish. Tom Saal, vice president at FCStone Latin America in Miami in his work with Market Profile weekly data says to expect the market to test last week’s value area at $3.102 to $3.024. Saal also says another likely target is an area of “minus development” at $3.18 to $3.15.