By Scott DiSavino

Oct 2 (Reuters) -U.S. natural gas futures climbed about 3% to a 16-week high on Wednesday on a decline in output in recent days and forecast for more demand this week than previously expected.

Front-month gas futures NGc1 for November delivery on the New York Mercantile Exchange were up 7.3 cents, or 2.55%, to $2.969 per million British thermal units (mmBtu) at 9:18 a.m. EDT (1318 GMT), putting the contract on track for its highest close since June 12.

That price gain kept the front-month in technically overbought territory for a fourth day in a row for the first time since May.

Recent increases in the November front-month contract have cut the premium of futures for December over November NGX24-Z24 to roughly 38 cents per mmBtu, the lowest since November 2022.

In other gas markets, the volume of shares traded in the U.S. Natural Gas Fund (UNG) UNG jumped to 13.9 million contracts on Oct. 1, the most since March 2022. That compares with record volume of 125.4 million contracts on April 21, 2020 and daily averages of 3.6 million so far this year, 3.7 million in 2023 and 5.3 million during the prior five years (2018-2022).

UNG is an exchange-traded fund (ETF) designed to track the daily price movements of gas.

Another factor supporting prices in recent weeks - the front-month has gained about 44% over the past five weeks - was a drop in the amount of fuel going into storage for the 2024-2025 winter heating season.

Storage injections in July, August and likely in September were at record lows, according to federal energy data going back to 1997.

That's because many producers reduced their drilling activities this year after average spot monthly prices at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana fell to a 32-year low in March. They have remained relatively low since that time.

Even though storage injections have been lower than usual in 19 of the past 20 weeks, however, the amount of gas in inventory was still about 6% above normal levels for this time of year due to low heating demand during the mild winter of 2023-2024. EIA/GAS NGAS/POLL

One factor that has weighed on gas prices in recent days was the reduction in the amount that gas power generators need to burn, with over 1.3 million homes and businesses still without power in the U.S. Southeast and Midwest after Hurricane Helene battered the region late last week.

The U.S. National Hurricane Center projected that there was a 40% chance that a tropical cyclone could form in the Gulf of Mexico over the next week.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 100.5 billion cubic feet per day (bcfd) so far in October, down from 101.8 bcfd in September. That compares with a record 105.5 bcfd in December 2023.

LSEG forecast average gas demand in the Lower 48, including exports, will hold around 95.4 bcfd this week and next. The forecast for this week was higher than LSEG's outlook on Tuesday, while the forecast for next week was lower.

Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants have fallen to an average of 11.9 bcfd so far in October, down from 12.7 bcfd in September. That compares with a monthly record high of 14.7 bcfd in December 2023.

That reduction was due mostly to the planned Sept. 20 shutdown of Berkshire Hathaway Energy's 0.8-bcfd Cove Point LNG export plant in Maryland for around three weeks of annual maintenance.

Reporting by Scott DiSavino; editing by Paul Simao

For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.

For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal

For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C