"Natural gas is down as demand weakness seems to be overshadowing production cuts. The weather outlook is in goldilocks-ville, not to hot and not too cold, just right for storage increases," said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Demand in the Lower 48 states, including exports, is expected to decline as the weather turns milder, falling from 87 bcfd this week to 84.8 bcfd next, according to Refinitiv.
Meanwhile, oil prices slumped again on Monday on concerns over scarce storage capacity, especially in the United States, and global economic doldrums from the coronavirus pandemic.
"Natural gas (is) succumbing to oil plunge with colder than previously expected Midwest temperatures unable to offer much support," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a note.
Gas output in the Lower 48 states fell to a 11-week low of 91.7 bcfd on Thursday, and stood at 92.0 bcfd on Sunday, according to data provider Refinitiv.
Last week's report from the US Energy Information Administration (EIA) showed utilities injected 43 billion cubic feet (bcf) of gas into storage during the week ended April 17. The increase boosted stockpiles to 2.140 trillion cubic feet (tcf), 20.5% above the five-year average of 1.776 tcf for this time of year.
Looking ahead, gas futures for the balance of 2020 and calendar 2021 were trading higher than the front-month on expectations demand will jump as the economy snaps back once governments loosen travel and work restrictions.
In the long-term, the EIA projected the reduction in drilling will cut gas production to an annual average of 91.7 billion cubic feet per day (bcfd) in 2020 and 87.5 bcfd in 2021 from a record 92.2 bcfd in 2019. That would be the first annual production decline since 2016 and the first time since 2005 that output fell for two consecutive years.