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CHICAGO: US natural gas futures rose to their highest in a week on Wednesday on expectations that surging global prices will boost US exports back to record highs in coming weeks.

That US price gain came despite forecasts for milder weather and lower demand over the next two weeks than previously expected, a decline in exports and a slow but steady increase in output this month.

On their last day as the front-month, gas futures for June delivery rose 3.7 cents, or 1.3%, to $2.950 per million British thermal units (mmBtu) at 8:55 a.m. EDT (1255 GMT), putting the contract on track for its highest close since May 19.

The July contract, which will soon be the front-month, gained about 3 cents to $3.00 per mmBtu.

Data provider Refinitiv said gas output in the Lower 48 US states averaged 90.9 billion cubic feet per day (bcfd) so far in May, up from 90.6 bcfd in April. That, however, is still well below November 2019’s monthly record of 95.4 bcfd.

With milder weather on the horizon and the US Memorial Day holiday coming this weekend, Refinitiv projected average gas demand, including exports, would ease from 83.4 bcfd this week to 82.4 bcfd next week. Those forecasts were lower than Refinitiv predicted on Tuesday.

The amount of gas flowing to US LNG export plants averaged 10.8 bcfd so far in May, down from April’s monthly record of 11.5 bcfd. The decline was due to short-term issues and normal spring maintenance at a few Gulf Coast plants and the gas pipelines that supply them, including small reductions in feedgas to Corpus Christi in Texas and Cameron in Louisiana over the past couple of days. But with European gas prices at their highest since September 2018 and Asian prices near $11 per mmBtu, analysts said they expect buyers around the world to keep purchasing all the LNG the United States can provide. US pipeline exports to Mexico, meanwhile, averaged 6.0 bcfd so far in May, just off April’s monthly record of 6.1 bcfd, Refinitiv data showed.

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