Feb 7 (Reuters) - U.S. natural gas futures have collapsed about 22% so far in 2024, reaching a three-year low on Wednesday as near-record output and mostly mild weather this winter depress heating demand.

Low prices are good for consumers who use gas for cooking and to heat homes and businesses. It is also great for companies exporting the fuel via pipelines to Mexico or as liquefied natural gas (LNG) to the world.

But, low prices are bad for producers and energy service companies that make money pulling the fuel out of the ground.

"The biggest losers are the speculators and those producers who didn't hedge," said John Kilduff, a partner at Again Capital LLC in New York. Hedging is a risk management strategy used to offset losses or protect gains.

Gas producers can lock in the prices they receive for their gas by buying or selling futures and other contracts so they can profit no matter how low prices fall. Of course, the downside to this hedging strategy is when prices rise, producers could miss out on those gains.

"This is devastating for the small producers," said Phil Flynn, an analyst at Price Futures Group. "If they don't see some price relief, some folks in the industry tell me a lot of these smaller producers ... are just going to have to close up shop."

Front-month gas futures fell 4.2 cents, or 2.1%, to settle at $1.967 per million British thermal units (mmBtu) on Wednesday, their lowest close since September 2020.

One of the first things analysts expect to see with low prices is a reduction in rigs drilling for gas.

U.S. drillers cut the number of gas rigs by 23% in 2023, leaving just 120 rigs in service at the end of the year, according to data from energy service firm Baker Hughes. That compares with a weekly average of 147 gas rigs active in 2022.

Gas producers were already upset that the nation's biggest source of gas demand growth, LNG exports, could be limited by the Biden administration's pause in permitting new projects.

"A continued acceleration of U.S. LNG exports is the single most impactful thing we could do to solve the global energy crisis and provide energy security to Americans," Toby Rice, CEO of EQT, the nation's biggest gas producer, told a U.S. House subcommittee this week.

To be sure, the U.S. is the world's biggest LNG producer and its export capacity will almost double from about 13.8 billion cubic feet per day (bcfd) now to around 24.5 bcfd by the end of 2028 as projects already under construction enter service.

One billion cubic feet of gas can supply about five million U.S. homes for a day.

In fact, analysts have said the expected increase in LNG exports was the primary reason gas companies produced record amounts in 2023 despite a 44% drop in prices, and it is why they plan to keep pulling record amounts of gas out of the ground in 2024 and 2025. (Reporting by Scott DiSavino Editing by Chris Reese)