HOUSTON (Dow Jones)--Natural gas ended below $3 on Monday as a downturn in the crude oil market and mild weather weighed on prices.

Natural gas for October delivery on the New York Mercantile Exchange settled 5.6 cents, or 1.85%, lower at $2.977 a million British thermal units. The front-month contract sank as low as $2.914/MMBtu in earlier trading.

Natural-gas prices faced pressure from declines in crude oil and equities, which can serve as bellwethers for the economy and overall energy demand.

"We have no strong weather demand to speak of and crude coming down hard and fast has gas under $3," said Pax Saunders, an analyst with Houston-based Gelber & Associates.

Crude oil for October delivery settled down $2.78 on the Nymex at $69.96 a barrel.

The decline in natural gas prices on Monday means the October gas contract is narrowing a gap that existed last week when the September contract expired and October became the front-month contract. The September futures contract settled Thursday at $2.843/MMBtu.

Cool temperatures also put some pressure on prices.

"A substantial cool down has over spread the northern and central Plains eastward to the Northeast and mid-Atlantic, and has resulted in a temperature regime more like October than late August," Jim Rouiller, senior energy meteorologist with the private forecasting firm Planalystics, wrote in a note to clients.

Mild temperatures can help stifle demand for natural gas-fired power used to cool homes and businesses. Those temperatures can also bolster storage injections, which are on pace to rise to record levels before the winter heating season begins.

Natural gas in U.S. storage for the week ended Aug. 21 stood at 3.258 trillion cubic feet - 19% higher than last year and 18% above the five-year average.

Meteorologists are also tracking a tropical disturbance about 500 miles east of the Lesser Antilles. The storm system has a high potential, or greater than a 50% chance, of becoming a tropical cyclone during the next two days.

However, the storm was not expected Monday to go on and threaten energy-rich infrastructure in the U.S. Gulf of Mexico.

"No Gulf threats are seen from this feature," meteorologists with the private forecasting firm Commodity Weather Group wrote in a note to clients.

Traders and analysts closely watch storm activity that could disrupt gas supplies from the U.S. Gulf, which produces about 11% of domestic natural gas.


FUTURES SETTLEMENT NET CHANGE
Nymex Oct $2.977 -5.6c
Nymex Nov $3.998 -5.5c
Nymex Dec $4.832 -8.1c

CASH HUB RANGE PREVIOUS DAY
Henry Hub $2.30-$2.60 $2.39-$2.65
Transco 65 $2.55-$2.76 $2.36-$2.56
Tex East M3 $2.58-$2.65 $2.56-$2.72
Transco Z6 $2.55-$2.76 $2.54-$2.72
SoCal $2.61-$2.68 $2.53-$2.71
El Paso Perm $2.45-$2.50 $2.40-$2.53
El Paso SJ $2.35-$2.46 $2.37-$2.48
Waha $2.44-$2.53 $2.45-$2.58
Katy $2.34-$2.48 $2.36-$2.59


-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com