Natural gas futures and related exchange traded funds plunged Wednesday as forecasts show milder-than-expected weather ahead.

The United States Natural Gas Fund (NYSEArca: UNG) fell 6.3% Wednesday, breaking below its long-term, 200-day simple moving average, while the Nymex natural gas futures declined 7.1% to $2.97 per million British thermal units.

Meanwhile, aggressive, risk-tolerant traders exploited plummeting natural gas prices with leveraged exchange traded products such as the VelocityShares Daily 3x Inverse Natural Gas ETN (NYSEArca: DGAZ), which seeks to provide the daily inverse 3x or -300% performance of NYMEX natural gas futures. The ProShares UltraShort Bloomberg Natural Gas (NYSEArca: KOLD) provides the daily inverse 2x or -200% performance. On Wednesday, DGAZ surged 19.2% and KOLD jumped 12.9%.

Natural gas prices have been advancing on the sudden cold snap that gripped much of America as heating demand increased to fight off the winter chill. However, fresh models released overnight revealed temperatures won’t be as cold as previously expected through both the upcoming six- to 10-day and eight- to 14-day periods, according to Investing.com.

“In what can only be described as one of the largest overnight ensemble changes of the last few years, all guidance moved in a direction that was markedly warmer overnight” with patterns showing “cold having significantly less staying power across the center of the country,” Bespoke Weather Services said Wednesday. “…It had been clear for the past week plus that cold weather risks in February were the one thing propping up an otherwise rapidly loosening natural gas market, and we saw sizable downside once that cold was removed from the equation.”

Natgas prices typically strengthen during the winter months as cold weather conditions fuel indoor-heating demand. The heating season usually lasts from November through March, contributing to peak demand for U.S. natural gas consumption.

The recent winter chill has contributed to increased inventory draws over the past few weeks. The unusually strong natural gas storage withdrawals for natural gas has brought storage levels to the low end of a five-year range and lifted natural gas prices.

For more information on the natgas market, visit our natural gas category.