NEW YORK: US natural gas futures rose about 2% on Wednesday on a decline in daily output and an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants since Freeport LNG’s export facility in Texas exited an eight-month outage in February and returned to full power over the past week.

That price increase occurred despite forecasts for milder weather and lower heating demand over the next two weeks than previously expected, which should allow utilities to start injecting gas into storage this week.Front-month gas futures for May delivery on the New York Mercantile Exchange (NYMEX) rose 4.9 cents, or 2.3%, to settle at $2.155 per million British thermal units.

The market has been extremely volatile in recent weeks with the front-month gaining or losing more than 5% in 12 of the past 23 trading days.

With gas market volatility rising, open interest in NYMEX gas futures rose to 1.37 million contracts on Tuesday, the most since October 2021 for a fourth day in a row.

At the same time, shares outstanding in the US Natural Gas Fund, an exchange-traded fund (ETF) designed to track the daily price movement of gas, rose to a record 165.9 million, topping the prior record of 161.4 million set on March 30.

Freeport LNG’s export plant, which shut in June 2022 after a fire, was on track to pull in about 2.2 billion cubic feet per day (bcfd) of gas on Wednesday, down from 2.3 bcfd on Monday and Tuesday, according to data provider Refinitiv.

That, however, was still above the 2.1 bcfd of gas Freeport LNG can turn into LNG for export.

LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power equipment used to produce LNG.

Average gas flows to all seven big US LNG export plants has risen to 13.9 bcfd so far in April, up from a record 13.2 bcfd in March. The seven big US LNG export plants can turn about 13.8 bcfd of gas into LNG.

Refinitiv said average gas output in the US Lower 48 states has risen to 99.9 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January 2023. On a daily basis, however, gas output was on track to decline 2.4 bcfd over the last three days to a preliminary two-month low of 98.5 bcfd on Wednesday. Most of the declines this week were in Pennsylvania and West Virginia.

Meteorologists projected the weather in the Lower 48 states would remain mostly warmer than normal through April 20, except for a few near-normal days from April 6-8.

With warmer spring-like weather expected to keep reducing the amount of gas burned to heat homes and businesses, Refinitiv forecast US gas demand, including exports, would drop from 101.7 bcfd this week to 95.2 bcfd next week. Those forecasts were lower than Refinitiv’s outlook on Tuesday.

Mostly mild weather over the 2022-2023 winter allowed utilities to leave more gas in storage than usual and should enable them to start injecting fuel into inventories this week.

Gas stockpiles were about 21% above their five-year average (2018-2022) during the week ended March 24 and were expected to end about 20% above normal during the colder-than-normal week ended March 31, according to federal data and analysts’ estimates.