U.S. natural gas futures rose about 2% to a one-week high on Wednesday on forecasts for more demand over the next two weeks than previously expected and a drop in daily output.

On its last day as the front-month, gas futures for October delivery on the New York Mercantile Exchange rose 4 cents, or 1.5%, to $2.696 per million British thermal units (mmBtu) by 8:50 a.m. EDT (1250 GMT).

That puts the contract on track to rise for a fourth day in a row for the first time since mid September and to close at its highest since Sept. 20.

Futures for November, which will soon be the front-month, were up about 5 cents at $2.90 per mmBtu.

A lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 50.6%, the lowest since April 2022.

Historic volatility hit a record high of 177.7% in February 2022 and a record low of 7.3% in June 1991. Historic volatility has averaged 76.7% so far this year, compared with a record high of 92.8% in 2022 and a five-year (2018-2022) average of 57.9%.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the lower 48 U.S. states slid to 102.0 billion cubic feet per day (bcfd) so far in September, down from a record 102.3 bcfd in August.

On a daily basis, output was on track to drop by 2.6 bcfd over the past two days to a preliminary five-month low of 99.4 bcfd on Wednesday. Energy traders, however, have noted that preliminary data is often revised later in the day.

Meteorologists forecast the weather in the lower 48 states would remain warmer than normal through at least Oct. 12. Analysts noted that above-normal temperatures in early October were still relatively mild, with averages expected to be around 73 degrees Fahrenheit (22.8 Celsius) versus a normal of 69 F for that time of year.

With liquefied natural gas (LNG) and pipeline exports expected to increase, LSEG forecast U.S. gas demand, including exports, would rise from 95.1 bcfd this week to 95.5 bcfd next week. Those forecasts were higher than LSEG’s outlook on Tuesday.

Pipeline exports to Mexico rose to an average of 7.2 bcfd so far in September, up from a record 7.1 bcfd in August, according to LSEG data.

Gas flows to the seven big U.S. LNG export plants rose to an average of 12.5 bcfd so far in September, up from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.

On a daily basis, feedgas was on track to rise from a nine-month low of 9.8 bcfd on Tuesday to 10.4 bcfd on Wednesday. Tuesday’s low was due to ongoing maintenance at Berkshire Hathaway Energy’s 0.8-bcfd Cove Point in Maryland and reductions at other plants, including Cheniere Energy’s Sabine Pass in Louisiana and Corpus Christi in Texas.

Cove Point shut for about two weeks of maintenance on Sept. 20.

The U.S. is on track to become the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due to supply disruptions and sanctions linked mostly to Russia’s war in Ukraine.

Gas was trading around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $15 at the Japan Korea Marker (JKM) in Asia.

(Reporting by Scott DiSavino; Editing by Kirsten Donovan)