Natural gas futures fell with a thud after the latest forecasts show warmer temperatures than expected in November.
"They were forecasting some heavy-duty cold for November, and now they've dialed back," said John Kilduff of Again Capital. "Right now, with supplies being where they are, we're highly reactive to that."
November natural gas futures closed down 3.7 percent at $3.569 per million British thermal units in afternoon trading.
Natural gas in storage is at a near record high, at 3.74 trillion cubic feet, but 2.4 percent below last year's record high, said Kilduff.
According to the National Weather Service, the forecast for Nov. 4 to 10 shows higher than normal temperatures from Texas to the East Coast, and while the West Coast is expected to be colder than average, New England and part of the Midwest are expected to be normal.
"We're going to have a few weeks where the weather is really going to drive our direction," said Gene McGillian, an energy analyst with Tradition Energy.
McGillian said natural gas may have seen most of its losses for now because it is still early in the heating season. The lows of this year came in the beginning of January, when natural gas was trading at $3.05, and the high was set in April when cold spring weather sent futures to $4.44.
Monday's decline was the biggest drop in front month natural gas futures since late June, erasing the gains of 3.5 percent made in the last three sessions. The November contract expires Tuesday. The December contract finished the day at $3.661 per million BTUs.
"I think the real thing we have to keep in mind is there's so much gas being produced and more than ample supplies," McGillian said. "Because of where we are in the calendar year, with all winter coming up,I'd be surprised if you're going to get aggressive selling under $3.50."
The Energy Information Administration expects the U.S. to produce a record amount of natural gas this year. Gas added to storage last week is expected to be between 20 and 43 billion cubic feet, off from 87 bcf, the week earlier, when it is reported Thursday.
—By CNBC's Patti Domm. Follow her on Twitter @pattidomm