U.S. gas prices have fallen even further in recent weeks as the market tries to avert a glut by encouraging power producers to maximize gas combustion and switch away from coal.

Warmer-than-normal temperatures over the last three weeks have been responsible for pushing prompt gas prices within a whisker of multi-year lows.

Futures prices for gas delivered at Henry Hub in March 2020 fell to just $2.09 per million British thermal units on Jan. 2, the lowest since the contract started trading in 2008.

Since then, prices for gas deliveries in March 2020 have risen slightly to $2.15, but they are down from $2.88 at the same point last year and $2.94 in 2018.

The fall comes as temperatures across the main population centers of the country have been consistently above average since Dec. 21, data from National Oceanic and Atmospheric Administration’s Climate Prediction Center shows.

So far this winter, heating demand, as measured by the number of population-weighted heating degree days, has been around 6% lower than the long-run average, and the negative deviation has been growing.

But gas production has been rising year-on-year at almost 10%, making maximum power burn essential to avoid an unplanned build up in gas stocks.

Low prices already seem to be working. Stocks have been moving in line with the five-year seasonal average despite the unseasonal warmth.

As a result, working stocks ended the year almost exactly in line with the 2014-2018 average.

But cheap gas and maximum power burn are intensifying the problems of coal-fired power plants, which find themselves unable to compete, and accelerating closures.

On the supply side, low gas prices are tightening the production outlook. The number of rigs drilling for gas has fallen by 39% since the start of last year.

If prices remain low for the next few months, the production-consumption balance is likely to be much tighter by the end of the year as output flattens or even falls.