U.S. natural gas futures eased about 1% to a one-week low on Thursday on rising output and forecasts for mild weather to keep both heating and cooling demand low through late October.

That price drop happened despite an increase in liquefied natural gas (LNG) exports with the return of Berkshire Hathaway Energy’s Cove Point export plant in Maryland and soaring gas prices in Europe.

The price move also preceded the release of a federal report expected to show last week’s storage build was smaller than usual for this time of year due in part to rising exports.

Analysts forecast U.S. utilities added 88 billion cubic feet (bcf) of gas into storage during the week ended Oct. 6. That compares with an increase of 125 bcf in the same week last year and a five-year (2018-2022) average increase of 93 bcf.

If correct, last week’s increase would boost stockpiles to 3.533 trillion cubic feet (tcf), or 5.0% above the five-year average of 3.366 tcf for the time of year.

After rising to an eight-month high earlier this week, front-month gas futures for November delivery on the New York Mercantile Exchange were down 4 cents, or 1.25, to $3.337 per million British thermal units (mmBtu) at 9:27 a.m. EDT (1327 GMT) on Thursday, putting the contract on track for its lowest close since Oct. 5.

In Europe, gas prices at the Title Transfer Facility (TTF) benchmark in the Netherlands soared about 10% to a seven-month high of around $16 per mmBtu on worries that violence in the Middle East could reduce global supplies.

Despite the U.S. futures price decline, the front-month remained in technically overbought territory, with a relative strength index over 70, for a sixth day in a row for the first time since July 2022.

Shares outstanding in the U.S. Natural Gas Fund fell by a record 13.6 million shares to a seven-week low of around 155.1 million shares on Oct. 10, according to data from financial firm LSEG. That share decline, worth roughly $107.4 million, topped the prior biggest daily decline of 11.1 million shares in February 2023, which was worth around $101.2 million.

UNG is an exchange-traded fund (ETF) designed to track the daily price movements of gas. Analysts noted the share sale likely showed some speculators took profits in the overbought market and was not related to UNG’s monthly rollover. UNG is scheduled to start rolling expiring front-month contracts to the next-nearest month from Oct. 13-18.

SUPPLY AND DEMAND

LSEG said average gas output in the Lower 48 U.S. states has risen to 102.9 billion cubic feet per day (bcfd) so far in October, up from 102.6 bcfd in September, but still below the monthly record of 103.1 bcfd in July.

With seasonally cooler weather coming, LSEG forecast U.S. gas demand, including exports, would rise from 94.5 bcfd this week to 96.0 bcfd next week. Those forecasts were similar to LSEG’s outlook on Wednesday.

Pipeline exports to Mexico held near 7.2 bcfd so far in October, the same as the monthly record high hit in September.

Analysts expect exports to Mexico to rise even higher in coming months once New Fortress Energy’s plant in Altamira starts pulling in U.S. gas to turn into liquefied natural gas (LNG) for export.

Gas flows to the seven big U.S. LNG export plants have risen to 13.1 bcfd so far in October with the return of Cove Point, up from 12.6 bcfd in September, but still well below the record high of 14.0 bcfd in April.

(Reporting by Scott DiSavino; Editing by Paul Simao)