NEW YORK: US natural gas futures slid about 2% on Tuesday on rising output and forecasts for lower demand over the next two weeks than previously expected.

On its first day as the front-month, gas futures for September delivery on the New York Mercantile Exchange fell 1.4 cents, or 0.7%, from where the contract closed on Monday to $2.022 per million British thermal units at 9:38 a.m. EDT (1338 GMT).

That, however, still put the front-month up about 5% from where the lower-priced August contract closed on Monday, when it was still the front-month. The August contract settled at $1.907 per mmBtu, the lowest close since April 26.

That price decline came despite bullish forecasts for record-breaking heat later this week that could boost the amount of gas power generators burn to an all-time high.

At the same time, the amount of gas flowing to Freeport LNG in Texas was on track to reach a preliminary 14-month high on Tuesday after the plant slowly returned to full service following a nine-day outage for Hurricane Beryl in early July.

Analysts said the combination of higher gas use by power generators and rising LNG exports could cause utilities to take the unusual step of pulling gas out of storage during the first week of August. That would be the first weekly storage withdrawal in August since 2006.

There was currently about 17% more gas in storage than normal for this time of year.

Storage builds have been mostly smaller than usual in recent weeks, because several producers cut output earlier this year after futures prices dropped to 3-1/2-year lows in February and March.

Higher prices in April and May, however, prompted some drillers, including EQT and Chesapeake Energy, to slowly boost output.

But with prices down about 23% so far in July, some analysts think producers may keep their drilling activities reduced for longer.