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Nat gas is cheap, and you can thank the weather

After a brutally cold winter, weather forecasters and traders alike were expecting a brutally hot summer.

It hasn't turned out that way. And that's throwing natural gas prices for a curve.

Temperatures have not been extreme across the United States on the East Coast, Midwest or even the drought-stricken West Coast, and it's already the middle of July—typically one of the hottest times of the year.

Steve Geer | Vetta | Getty Images

In fact, the middle of the country has experienced what some are calling a "polar vortex" or a "polar invasion," with temperatures 10 to 30 degrees below average in some parts of the Upper Midwest and the Great Lakes.

The cooler-than-expected weather is having a real effect on the futures market, in the form of cheaper natural gas

Natural gas prices were staying supported at around $4.50 per mmbtu after a cold winter. Traders were focusing on total storage figures for the year, almost a trillion cubic feet lower than a year earlier. But with cooler weather and less demand for natural gas from utilities, the market has come off to under $4 as of Thursday—that's a drop of around 15 percent in the last month.

Meanwhile, weekly storage figures have been higher than average, so supplies could recover significantly if the weather stays mild.

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"There have been 12 weeks of supply gains that are above average, and that seems to be weighing on the price of nat gas," said Jim Iuorio, managing director of TJM Institutional Services. "I think the unusually mild winter has caught many people off guard, particularly those who remained long after the awful winter we had."

In fact, traders who were long natural gas appear to have been caught off guard, according to Jeff Kilburg, founder and CEO of KKM Financial.

"The nat gas move has caught some of the longs badly ... those folks who were trying to get out in front of the weather, which has not heated up as of yet," Kilburg said. "Demand, demand, demand has just not surfaced."

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"Traders follow the Farmer's Almanac, and there was no indication that we would have this mild of a summer, especially when you look back to last summer and the year before that," added Anthony Grisanti, president of GRZ Energy.

What do lower natural gas prices mean for consumers? Lower cooling bills, for one thing, and that could have a broader impact on the economy.

"This fair weather is helping consumers across the board as nat gas is coming down in prices, but also agricultural prices like corn and soybeans are also decreasing," Kilburg said. "That will certainly help alleviate some of the inflation burdens that the consumer has experienced."

"This is going to be fantastic for consumers. A warm summer wouldn't have rocketed prices, but the cooler weather has helped lower them," Grisanti said. "The cooler-the-normal temps make the threat of drought and crop damage less severe, which could mean relief in prices for the grains and the softs, like coffee, sugar, cocoa as well."

For those who are wondering where prices will go from here, traders say if that Mother Nature stays kind, prices could see a big, further drop.

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Kilburg is watching $3.98 to $4.02, because that was an area of great resistance before and should be supportive. He says it's a level that will challenge the bears.

Grisanti is eyeing a similar area but sees more downside. "Prices could go as low as $3.75—that's where nat gas broke out before the winter started. We are now below the 200- and 50-day moving averages. The number I'm watching is $3.95, we haven't seen that since January 10."

Peter Amandio of Chicago Energies said the charts indicate we could even go as low as $3.60.

—By CNBC's Jackie DeAngelis

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