US natural gas futures dropped over 7% on Wednesday as output climbs with Gulf Coast wells returning to service after Hurricane Delta and on forecasts for milder weather and lower heating demand than previously expected over the next two weeks.

That price drop came despite a continued increase in gas flows to liquefied natural gas (LNG) export plants now that all facilities were ramping up following hurricane and maintenance shutdowns.

Front-month gas futures fell 21.9 cents, or 7.7%, to settle at $2.636 per million British thermal units. That puts the contract down about 11% since hitting a 20-month intraday high on Monday.

Data provider Refinitiv said output in the Lower 48 US states jumped to 85.8 billion cubic feet per day (bcfd) on Tuesday from a 26-month low of 82.4 bcfd over the weekend as wells shut for Delta returned to service.

As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 85.0 bcfd this week to 91.5 bcfd next week. That, however, is lower than Refinitiv's forecast on Tuesday.

The amount of gas flowing to LNG export plants has averaged 6.7 bcfd so far in October, up from 5.7 bcfd in September, despite several hurricane and maintenance outages this month.

That would be the most in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices have prompted buyers to reverse some earlier cargo cancellations.

Previously, US exports fell every month from March to July as coronavirus-related demand destruction caused prices in Europe and Asia to collapse and buyers to cancel around 175 cargoes.