U.S. natural gas futures rose about 2% on June 2 on forecasts for more demand over the next two weeks than previously expected and record exports to Mexico.

The price jump occurred despite near record U.S. output and continued low amounts of gas flowing to U.S. LNG export plants due to maintenance.

Front-month gas futures for July delivery on the New York Mercantile Exchange (NYMEX) were up 4.5 cents, or 2.1%, to $2.203 per million British thermal units (MMBtu) at 9:01 a.m. EDT (1301 GMT). On June 1, the contract closed at its lowest level since May 5.

That put the contract up about 1% for the week after it lost about 16% last week.

With growing interest in energy trading, open interest in NYMEX gas futures rose to 1.387 million contracts on June 1, its highest number since September 2021.

In the spot market, meanwhile, low demand due to mild weather cut next-day gas prices for June 2 at the U.S. Henry Hub benchmark in Louisiana to $1.77 per MMBtu, their lowest price since October 2020.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states has eased to 102.4 billion cubic feet per day (Bcf/d) so far in June, down from a monthly record of 102.5 Bcf/d in May.

Meteorologists projected the weather in the Lower 48 states would remain mostly near through June 15 before turning warmer than normal from June 16-17.

Refinitiv forecast U.S. gas demand, including exports, would rise from 91.0 Bcf/d this week to 93.9 Bcf/d next week and 95.0 Bcf/d in two weeks as the weather turns seasonally warmer, prompting power generators to start burning more gas to meet rising air conditioning use.

The demand forecast for next week was higher than Refinitiv's forecast on June 1.

U.S. exports to Mexico have risen to 7.6 Bcf/d so far in June, up from 5.9 Bcf/d in May. That compares with a monthly record high of 6.7 Bcf/d in June 2021.

Gas flows to the seven big U.S. LNG export plants rose to 13.1 Bcf/d have risen so far in June, up from 13.0 Bcf/d in May. That was still well below the monthly record of 14.0 Bcf/d in April due to maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana.

Record flows in April were higher than the 13.8 Bcf/d of gas the seven big export plants can turn into LNG since the facilities also use some of the fuel to power equipment used to produce LNG.

GLOBAL GAS PRICE COLLAPSE

Some analysts have questioned whether this year's gas price collapse in Europe and Asia could force U.S. 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 canceled 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 U.S. LNG exports in 2023.

Gas was trading at a 25-month low of around $7 per MMBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and near a 24-month low of $9 at the Japan Korea Marker (JKM) in Asia. That put both TTF and JKM down about 69% so far this year.

U.S. gas futures, which are down about 52% so far this year, lag far behind global prices because the United States is the world's top producer with all the fuel it needs for domestic use, while capacity constraints prevent the country from exporting more LNG.