Call it the perfect nonstorm.
Natural gas was cratering Monday, as mild weather forecasts compound a supply surplus and a general energy market swoon.
Nat gas futures were as low as $3.12 per million British thermal units, which is the lowest level since January 2013, and represents a decline of 15 percent in two trading sessions. (The futures have ticked a bit higher after hitting those lows at 9:44 a.m. ET, but are still down sharply on the day.)
The backdrop for the move is Thursday's natural gas inventory report, which showed a year-over-year supply surplus for the first time since December 2012. However, it was not until this news was compounded by a mild seven-day forecast for the Northeast that nat gas futures really started to plunge.
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"Going into the weekend, it looked like the I-95 corridor was going to see pretty good demand," said Stephen Schork of The Schork Report, referring to the area from Boston to Washington, D.C., around Interstate 95. "But now we're looking at some pretty mild temperatures this week into the next, so you get a situation where people are just bailing on this market right now."
Nat gas bulls prey on extreme weather—hot in the summer, cold in the winter—because individuals and businesses use nat gas for both heating and cooling. But so far this year, much of the United States has seen mild weather in both summer and winter.
And with this latest forecast, traders who have recently gotten long seem to have finally given up on the hope that a repeat of last winter is ahead, when frigid weather met shrinking supplies to send nat gas futures as high as $6.49.