US natural gas futures fell on Thursday, hovering close to a four-month trough, with weather forecast to stay mild for a couple of weeks and gas production nearing record highs.

Front-month gas futures for February delivery on the New York Mercantile Exchange were down 3.7 cents, or 1.7%, at $2.152 per million British thermal units at 10:05 AM (1507 GMT)EDT/EST.

"Warmer than expected weather and high production are putting pressure on prices and the forecasts going forward does not imply cold weather," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

"However, the market is a bit oversold and any change in the weather forecasts could give a little bounce."

Data provider Refinitiv estimated 417 heating degree days (HDDs) over the next two weeks in the lower 48 US states, well below the 30-year average of 462. Refinitiv predicted demand, including exports, would fall to an average of 110.7 billion cubic feet per day (bcfd) this week from 112.5 bcfd in the prior week.

"This long string of relatively mild patterns is beginning to conjure up images of an unusually mild winter in total in forcing significant reductions in storage levels to be issued by the EIA through the rest of this month," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.

Utilities likely pulled 54 billion cubic feet (bcf) of gas from storage during the week ended Dec. 27. That compares with a decline of 24 bcf during the same week last year and a five-year (2014-18) average reduction of 89 bcf for the corresponding week.

Front-month prices hit a low of $2.14 on Dec. 27, its weakest level since Aug. 23. The contract fell about 26% in 2019 and was one of the biggest decliners among commodities last year.

Traders noted prices have dropped about 26% from the eight-month high of $2.905 per mmBtu hit in early November, citing mild weather and expectations inventories will still rise over the five-year average in coming weeks. Near-record production enables utilities to leave more gas in storage, wiping away lingering concerns of supply shortages and price spikes during the winter.