KARACHI: US natural gas futures climbed nearly 3% on Wednesday, as the expiration of the January contract helped push up prices, while the outlook for colder weather also lent support.

Front-month gas futures for January delivery on the New York Mercantile Exchange settled 7.1 cents, or 2.7%, higher, at $2.62 per million British thermal units. Prices rose as much as 6.8% to hit a three-week high earlier in the session.

The January contract expires as the front month on Wednesday, and volatility often peaks near contract expiration days because trading volumes are usually extremely low because few in the market want to deliver or take gas from the Henry Hub.

“The weather’s gotten a little cooler from what we were experiencing earlier in the month and we have the expiration of the contract,” said Thomas Saal, senior vice president for energy at StoneX Financial. “We expected some short covering going into expiration, and the market has been steadily crawling up.”

Financial firm LSEG forecast US gas demand in the Lower 48, including exports, at 120.6 billion cubic feet (bcfd) per day this week, down from last week’s 126.6 bcfd, weighed down by limited heating demand as businesses and government offices were shut for the Christmas week. However, demand was projected to rise to 132.5 bcfd during the next week as the forecast is for January to get colder.

LSEG said average gas output in the Lower 48 US states has risen to 108.8 bcfd so far in December from a record 108.3 bcfd in November

Gas flows to the seven big US LNG export plants have risen to an average of 14.6 bcfd so far in December, up from a record 14.3 bcfd in November.

Elsewhere, US sanctions targeting Russia’s massive Arctic LNG 2 project are unacceptable and undermine global energy security, the Russian foreign ministry’s spokeswoman said.