NEW YORK: US natural gas futures climbed about 2% to a 12-week high on Monday as oil and gas producers continued to reduce output after months of relatively low prices.

Front-month gas futures for October delivery on the New York Mercantile Exchange were up 5.9 cents, or 2.4%, to $2.493 per million British thermal units (mmBtu) at 9:18 a.m. EDT (1318 GMT), putting the contract on track for its highest close since June 28.

That price increase pushed the front-month into technically overbought territory for the first time since the middle of June.

With gas futures up about 20% over the past four weeks, speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for a third week in a row to their highest since early July, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.

Despite recent price gains, analysts forecast gas at the US Henry Hub benchmark in Louisiana would only average around $2.41 per mmBtu in 2024, a four-year low.

Analysts said those low prices were the biggest reason producers were on track to cut output this year for the first time since 2020, when the COVID-19 pandemic cut demand for the fuel.

In the Atlantic basin, the US National Hurricane Center (NHC) forecast a disturbance in the Caribbean Sea had an 80% chance of strengthening into a tropical cyclone as it moves into the eastern Gulf of Mexico over the next week or so.

Analysts have said that hurricanes and other storms were more likely to reduce gas prices by cutting demand through power outages and knocking liquefied natural gas (LNG) export plants out of service.

That’s because over 75% of US gas production comes from big inland shale basins like Appalachia in Pennsylvania, West Virginia and Ohio and the Permian in West Texas and eastern New Mexico.

That is very different from 20 years ago when roughly 20% of the nation’s gas came from wells in the federal offshore part of the Gulf of Mexico. Back then Gulf Coast hurricanes usually caused gas prices to spike higher.