NEW YORK: US natural gas futures slid about 3% on Tuesday on forecasts for less cold weather and lower heating demand this week than previously expected and a decline in the amount of gas curtailed by freezing wells.

In the spot market, however, extreme cold blanketing much of the country boosted next-day gas prices to their highest since January 2024 at several hubs including the US Henry Hub benchmark in Louisiana, the Eastern Gas South hub in Pennsylvania, the Southern California Border and in Chicago.

Front-month gas futures for February delivery on the New York Mercantile Exchange fell 13.3 cents, or 3.4%, to $3.801 per million British thermal units by 7:28 a.m. EST (1228 GMT).

Futures prices fell despite forecasts for colder weather than previously expected next week, which could boost gas demand to a new daily record high.

With gas futures up about 19% last week, speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for a fifth week in a row to the highest since February 2022, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.

Analysts projected the next three storage reports for the weeks ending Jan. 10, 17 and 24 could each show utilities pulling more than 200 billion cubic feet (bcf) of gas from inventories to meet soaring heating demand. Some analysts said withdrawals this month could top the current record high of 994 bcf set in January 2022, according to federal energy data.

There is currently about 7% more gas in storage than usual for this time of year. Storage withdrawals this month could wipe out the current surplus of gas in storage by the end of January. That would be the first time stockpiles fall below the five-year average since January 2022.

Financial firm LSEG said average gas output in the Lower 48 US states slid to 103.1 billion cubic feet per day (bcfd) so far in January, down from 104.2 bcfd in December. That compares with a record 104.5 bcfd in December 2023.

Over the weekend, LSEG slashed its estimated production curtailments due to freezing oil and gas wells and pipes to just 1.5 bcfd from Jan. 4-7, down from a projected 5.9 bcfd from Dec. 31-Jan. 10 on Friday. The energy industry calls those curtailments freeze-offs.

In past winters, freeze-offs cut gas output by around 16.5 bcfd from Jan. 8-16 in 2024, 19.4 bcfd from Dec. 21-24 in 2022, and 20.4 bcfd from Feb. 8-17 in 2021, according to LSEG data.

Meteorologists projected weather in the Lower 48 states would remain mostly colder than normal through Jan. 25, with the coldest days expected around Jan. 21, before turning mostly warmer than normal from Jan. 26-29.

With colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 143.5 bcfd this week to 152.5 bcfd next week.

The forecast for this week was lower than LSEG’s outlook on Monday, while its forecast for next week was higher.

On a daily basis, LSEG said total gas use so far this winter peaked at 158.9 bcfd on Jan. 8 and would reach 163.8 bcfd on Jan. 20 and 171.5 bcfd on Jan. 21. If correct, demand on Jan. 21 would top the current daily record of 168.4 bcfd on Jan. 16, 2024.

The amount of gas flowing to the eight big US LNG export plants rose to an average of 15.0 bcfd so far in January, up from 14.4 bcfd in December. That compares with a monthly record high of 14.7 bcfd in December 2023.