NEW YORK: US natural gas futures rose to a 31-month high on Monday on forecasts for higher demand this week than previously expected with the weather expected to remain hotter than normal through at least mid August.

That increase came despite forecasts for less demand next week as high gas prices prompt some power generators to burn more coal and less gas to produce electricity for air conditioning.

Front-month gas futures rose 8 cents, or 2.0%, to $4.140 per million British thermal units (mmBtu) at 8:08 a.m. EDT (1208 GMT), putting the contract on track for its highest close since December 2018 for a sixth day in a row.

In addition to the front-month gains, the premium of March 2022 futures over April 2022 rose to its highest since October 2010. The market uses the March-April spread to bet on the winter heating season when demand for gas is highest.

The gas industry calls the March-April spread the “widow maker” because rapid price moves resulting from changing weather forecasts have knocked some speculators out of business, including the Amaranth hedge fund, which lost over $6 billion on gas futures in 2006.

Speculators, meanwhile, cut their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges last week for a second week in a row as buyers cashed in some of their gains with the front-month up about 13% so far this month.

Data provider Refinitiv said US output in the Lower 48 states slipped to 91.5 billion cubic feet per day (bcfd) so far in July, due mostly to pipeline problems in West Virginia earlier in the month. That compares with an average of 92.2 bcfd in June and an all-time high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would slip from 95.5 bcfd this week to 94.0 next week. The forecast for next week was lower than Refinitiv predicted on Friday on expectations power generators will burn less gas and more coal to meet air conditioning demand.

The amount of gas flowing to US liquefied natural gas (LNG) export plants averaged 10.8 bcfd so far in July, up from 10.1 bcfd in June but still below April’s 11.5-bcfd record.

With European and Asian gas trading over $12 and $14 per mmBtu, respectively, analysts said buyers around the world would keep purchasing all the LNG the United States can produce.

US pipeline exports to Mexico have averaged 6.5 bcfd so far in July, down from a record 6.7 bcfd in June.