US natural gas futures on Tuesday were on course for their biggest annual decline since 2014, hovering close to a four-month low hit in the previous week on forecasts for milder-than-normal weather.

Front-month gas futures for February delivery on the New York Mercantile Exchange were down 2.2 cents, or 1%, at $2.164 per million British thermal units (mmBtu) as of 9:04 a.m EST (1404 GMT), on thin volume ahead of the New Year's holiday.

The front-month contract was down over 25% so far this year, on track for its biggest yearly decline since 2014. It is also one of the worst performing commodities of 2019.

The contract had slumped to its lowest level since Aug. 23 at $2.138 mmBtu on Friday.

"We are coming up to the last day of the year so people are probably not that interested in natgas," Thomas Saal, senior vice president of energy at INTL FCStone, said, adding there is not much change in the moderate weather forecast from the previous day.

Data provider Refinitiv predicted 409 heating degree days (HDDs) over the next two weeks in the lower 48 US states, compared with the 30-year average of 461, indicating warmer than normal temperatures.

Refinitiv also predicted demand, including exports, would fall to an average of 111.3 billion cubic feet per day (bcfd) this week from 112.4 bcfd in the prior week.

Traders noted prices have dropped 25% from the eight-month high of $2.905 per mmBtu hit in early November, citing mild weather and expectations that inventories will still rise over the five-year average in coming weeks.

Near-record production enables utilities to leave more gas in storage, wiping away lingering concerns of supply shortages and price spikes during the winter.

Utilities pulled 161 billion cubic feet (bcf) of gas from storage during the week ended Dec. 20. That compares with a decline of 61 bcf during the same week last year and a five-year (2014-18) average reduction of 101 bcf.

Gas production in the Lower 48 states stood at 95.1 bcfd on Monday, lower than the record high of 96.3 bcfd hit in end-November, according to Refinitiv data.