NEW YORK: US natural gas futures fell more than 4% on Wednesday on expectations that milder weather would reduce heating demand and with near-record production for the month pressuring prices.

Front-month gas futures for May delivery on the New York Mercantile Exchange (NYMEX) slipped 9.3 cents, or 4.3%, to settle at $2.093 per million British thermal units (mmBtu).

Prices continue to hold above $2 but aren’t gaining, as there is low demand, said Thomas Saal, senior vice president for energy at StoneX Financial Inc.

With warmer spring-like weather expected to reduce the amount of gas burned to heat homes and businesses, Refinitiv forecast US gas demand, including exports, would drop from 97.4 bcfd this week to 95.3 bcfd next week.

The US Energy Information Administration (EIA) said on Tuesday that US power consumption is expected to slip about 1% in 2023 from the previous year as milder weather slows usage from the record high hit in 2022

“We will likely see higher demand in July and August as homes and businesses will use air conditioners to escape heat,” Saal added.

Analysts have highlighted that there is strong support around the $2 level. Prices gained 8% on Monday after they slipped to $1.99 late last week.

Refinitiv said average gas output in the US Lower 48 states has risen to 100.1 billion cubic feet per day (bcfd) so far in April, up from 98.7 bcfd in March and compared with a monthly record of 100.4 bcfd in January.

Meanwhile, Russian gas giant Gazprom said that Europe’s ability to maintain ample gas stocks in the 2023/2024 winter hinges on Asia’s demand given “critically low” supplies from Russia.