NEW YORK: US natural gas futures jumped about 6% to a one-week high on Friday on worries output will decline in the future after energy companies this week cut the number of rigs drilling for gas by the most in seven years.

The gas rig count, an early indicator of future output, fell by 16 to 141 in the week to May 12, the lowest since April 2022, energy services firm Baker Hughes Co said in its closely followed report on Friday. The weekly gas rig decline was the most since February 2016.

Before Baker Hughes released its report, gas prices were little changed despite record US output, rising exports from Canada after wildfires and forecasts for mild weather that should keep demand low and allow utilities to inject more gas into storage than usual in coming weeks.

Front-month gas futures for June delivery on the New York Mercantile Exchange rose 12.2 cents, or 5.6%, to $2.312 per million British thermal units (mmBtu) at 2:05 p.m. EDT (1805 GMT), putting the contract on track for its highest close since May 1.

For the week, the contract was up about 8% after falling about 11% last week.

In the spot market, the lack of demand due to mild weather caused next-day gas prices for Friday at the PG&E Citygate in Northern California to drop to its lowest since June 2021.

Data provider Refinitiv said average gas output in the US Lower 48 states held at 101.4 billion cubic feet per day (bcfd) so far in May, matching the monthly record hit in April.

The amount of gas flowing from Canada to the US was on track to hold at 7.6 bcfd for a third day in a row on Friday, up from a 25-month low of 6.7 bcfd on Sunday as wildfires in Alberta caused some producers to shut oil and gas output and pipeline flows.

Since the start of the year, Canada has exported an average of 8.5 bcfd of gas to the United States.

Meteorologists projected the weather in the US Lower 48 states would switch from warmer-than-normal levels from May 12-17 to near-normal from May 18-27.

Refinitiv forecast US gas demand, including exports, would rise from 91.2 bcfd this week to 91.9 bcfd next week as some homes and businesses turn on their air conditioners before sliding to 90.1 bcfd in two weeks when the weather turns milder.

Gas flows to the seven big US LNG export plants fell to an average of 13.1 bcfd so far in May, down from a record 14.0 bcfd in April. The decline was due mostly to reductions at Cameron LNG’s terminal in Louisiana and Cheniere Energy Inc’s Sabine Pass in Louisiana.

Last month’s record flows were higher than the 13.8 bcfd of gas the seven plants can turn into LNG since the facilities also use some of the fuel to power equipment used to produce LNG.

Some analysts have questioned whether this year’s gas price collapse in Europe and Asia could force US exporters to cancel LNG cargoes this summer after mostly mild weather over the winter left massive amounts of gas in storage. In 2020, at least 175 LNG shipments were cancelled due to weak demand.

But for now, most analysts say energy security concerns following Russia’s invasion of Ukraine in February 2022 should keep global gas prices high enough to sustain record US LNG exports in 2023.

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