NEW YORK: US natural gas futures slid about 1% on Wednesday on forecasts for less cold weather through mid-December and near-record output that should reduce the amount of gas utilities need to pull from storage to meet rising heating demand.

Analysts forecast the amount of gas in US storage was about 8% above normal on Nov. 24. That price decline came despite forecasts for higher demand over the next two weeks than previously expected.

On its first day as the front month, gas futures for January delivery on the New York Mercantile Exchange fell 3.3 cents, or 1.2%, from their Tuesday close to settle at $2.804 per million British thermal units (mmBtu) on Wednesday.

That was still about 4% higher than where the December contract closed on Tuesday when it was still the front month, which was the lowest close since Sept. 26.

With production at record highs and ample amounts of gas in storage, the futures market has been sending signals that some traders have given up hope of seeing winter price spikes from November through March. Many in the market think futures have already peaked this winter in November.

The premium of futures for January over February fell to its lowest since June 2021 for a second day in a row. The premium of futures for 2025 (one year out) and 2029 (five years out) over 2024 both rose to record highs.

Analysts expect prices to rise in 2025 and later years as demand for gas grows, with several new US liquefied natural gas (LNG) export plants entering service in the US, Canada and Mexico.

In the spot market meanwhile, extreme cold in the US Northeast earlier this week boosted next-day gas prices in New England by 15% to $10.22 per mmBtu for Wednesday, their highest since February for a second day in a row.

LSEG said average gas output in the Lower 48 US states rose to 107.7 billion cubic feet per day (bcfd) so far in November, up from a record 104.2 bcfd in October.

On a daily basis, however, output over the past two days was on track to drop by 2.8 bcfd to a preliminary three-week low of 106.5 bcfd on Wednesday after hitting a record 109.3 bcfd on Monday.

Traders have noted that preliminary data is often revised later in the day.

Meteorologists projected the weather would swing from colder than normal now to warmer than normal from Nov. 30-Dec. 14.

With less cold coming, LSEG forecast US gas demand in the Lower 48 states, including exports, would drop from 128.3 bcfd this week to 119.2 bcfd next week. Those forecasts were higher than LSEG’s outlook on Tuesday.