NEW YORK: US natural gas futures fell about 4% on Monday on record output and forecasts for milder weather and lower heating next week than previously expected.

On its first day as the front-month, gas futures for December delivery on the New York Mercantile Exchange fell 13.1 cents, or 3.8%, from where that contract traded on Friday to settle at $3.352 per million British thermal units (mmBtu) on Monday.

That, however, was still up about 6% from where the November contract closed when it was still the front-month on Friday.

It was also the contract’s highest close since Oct. 11 and pushed it into technically overbought territory for the first time since mid-October.

One bearish factor that has weighed on the futures market for most of this year has been lower spot or next-day prices at the Henry Hub benchmark in Louisiana. The spot market has traded below front-month futures for 172 out of 207 trading days so far this year, according to LSEG data.

Next-day prices at the Henry Hub gained about 13% to around $3.24 per mmBtu for Monday.

Analysts have noted that so long as the futures market remains in contango and spot prices remain far enough below the front-month to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract.