US natural gas futures fell to their lowest in almost four years on Wednesday on forecasts for milder weather through mid February than earlier expected. On its last day as the front-month, gas futures for February delivery on the New York Mercantile Exchange fell 5.7 cents, or 2.9%, to settle at $1.877 per million British thermal units (mmBtu), their lowest close since March 2016.

The March future, which will soon be the front-month, lost about 4 cents to $1.865 per mmBtu. "With the rollover to the March contract, the weather influence will further diminish and the possibility of a sustained cold spell capable of erasing the current supply surplus will be further reduced," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report, noting "we still see appreciably more downside than upside price risk from current levels."

Since hitting an eight-month high of $2.905 per mmBtu in early November, futures have collapsed 35%. Record production and mild weather have enabled utilities to leave more gas in storage, making shortages and winter price spikes much less likely.

Meteorologists projected the weather in the US Lower 48 states will turn from warmer-than-normal now to mostly colder from Feb. 9-13. That, however, is warmer than Tuesday's outlook, which called for cold from Feb. 5-12. So far, this winter has been milder than usual with average daily temperatures 3 degrees Fahrenheit higher than normal in December and 5 degrees higher in January.

Refinitiv projected average demand in the Lower 48 states, including exports, would rise from 120.2 billion cubic feet per day (bcfd) this week to 120.6 bcfd next week. The forecast for next week is lower than Refinitiv's 123.6-bcfd estimate on Tuesday due to an expected drop in heating demand.

The amount of gas flowing to US LNG export plants was on track to jump to a record 9.4 bcfd on Wednesday, according to early pipeline flow data from Refinitiv. The US gas industry is counting on LNG exports, which soared 53% in 2018 and 68% in 2019, to remain the biggest driver of future demand growth.

But mild winter weather in Europe and Asia that is similar to North America has caused some gas prices in both LNG importing regions to fall to their lowest in years. Some analysts say US LNG export arbitrage to Asia has already closed and the window to Europe could close in coming months as Asian firms divert cargos to Europe and European hubs struggle to absorb additional supplies. That could prompt some US LNG exporters to temporarily shut their plants due to a lack of demand.

Analysts said utilities likely pulled 195 billion cubic feet (bcf) of gas from storage during the week ended Jan. 24. That compares with a decline of 171 bcf during the same week last year and a five-year (2015-19) average reduction of 149 bcf for the period.

If correct, the decrease for the week ended Jan. 24 would cut stockpiles to 2.752 trillion cubic feet (tcf), 7.8% above the five-year average of 2.553 tcf for this time of year.