Natural gas futures increased on Wednesday amid speculations that an interest rate cut by the Federal Reserve might boost the U.S. economy and reduce energy demand.

Earlier on Wednesday, the central bank lowered its benchmark interest rate by half a percentage point to 3 percent, becoming the second interest rate cut in an effort to avoid recession.

Gas for March delivery increased by 10.2 cents or 1.3 percent to $8.045 per million British thermal units on the New York Mercantile Exchange while as the February contract which expired yesterday, closed at $7.99 per million Btu.

This month, U.S. liguidified natural gas (LNG) imports were about one billion cubic feet a day, 70 percent less than January last year.

There are anticipations of a decline in stockpiles due to the set-in of cold weather.

In the week that ended Jan. 25, U.S. natural gas inventories declined by 253 billion cubic feet after being as high as 174 billion cubic feet, or 7.4 percent above the five year average for the week ended Jan. 18.