NEW YORK: US natural gas futures on Wednesday eased lower on forecasts for more mild weather next week that is expected to reduce heating demand and power generators’ use of the fuel.

Traders also noted commercial and industrial companies were expected to cut their gas usage over the long US Memorial Day weekend of May 27-29.

Front-month gas futures fell one cent, or 0.3 percent, to settle at $3.209 per million British thermal units, their lowest close since May 18.

Despite the decline, the contract was still up 27 percent from an eight-month low of $2.522 set in February. Investors see a possible price spike later this year if low output and mounting sales abroad leave inventories unusually low before next winter.

Over the past 30 days, gas production has averaged 70.9 billion cubic feet per day, compared with 71.9 bcfd during the same period in 2016 and 73.2 bcfd in 2015, according to Reuters data.

Output has remained at its lowest since 2014 since the start of the year.

US exports were expected to reach 8.3 bcfd this week, up 43 percent from a year earlier, the data showed.

Analysts estimate that utilities added 77 billion cubic feet of gas into storage during the week ended May 19. That compares with an increase of 71 bcf a year earlier and a five-year average build of 90 bcf for that period.

If the projection is correct, inventories would be about 11 percent above normal for this time of year.

US gas consumption was projected to fall to 64.4 bcfd next week from 66.8 bcfd this week, the Reuters data showed.

Meteorologists forecast this summer will be slightly warmer-than-normal but not quite as hot as last year, prompting expectations power generators will use a little more gas than usual but less than in 2016.

However, some of that increased demand could go to coal, which has cost about the same as gas since the start of May.

Regardless of which fuel power generators use this summer, analysts forecast gas inventories will rise by only 1.6 trillion cubic feet during the April-October injection season.—Reuters