July 10 (Reuters) - U.S. natural gas futures eased about 1% on Wednesday on recent increases in output, a drop in the amount of gas flowing to liquefied natural gas (LNG) export plants after Freeport LNG in Texas shut for Hurricane Beryl and a tremendous surplus of gas in storage for this time of year.

That price decline was limited by forecasts for more demand over the next two weeks than previously expected as a brutal heat wave will continue to blanket much of the country through at least late July, stoking demand for air conditioning and forcing power generators to burn more gas.

Analysts said gas stockpiles were about 18% above normal levels.

One factor depressing power demand this week was the roughly 1.6 million homes and businesses still without power in Texas on Wednesday in the wake of Hurricane Beryl.

Front-month gas futures for August delivery on the New York Mercantile Exchange fell 1.5 cents, or 0.6%, to settle at $2.329 per million British thermal units (mmBtu), keeping the contract in technically oversold territory for a second day in a row.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 102.4 billion cubic feet per day (bcfd) so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.

Several producers cut output after prices fell to a 3-1/2-year low in February and March. A price recovery in April and May, however, prompted some producers, including EQT (EQT.N) New Tab, opens new tab and Chesapeake Energy (CHK.O) New Tab, opens new tab, to start pulling more gas out of the ground. On a daily basis, output hit a 17-week high of 103.0 bcfd on Sunday.

EQT is the nation's biggest gas producer, and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy (SWN.N) New Tab, opens new tab.

Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 25.

With hotter weather expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 106.1 bcfd this week to 107.0 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday.

Gas flows to the seven big U.S. LNG export plants fell to 12.2 bcfd so far in July after Freeport LNG in Texas shut ahead of Hurricane Beryl on Sunday, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.

Sources told Reuters that Freeport LNG would likely restart by Thursday.

The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine.

With worries about Hurricane Beryl receding, gas prices fell to a seven-week low of around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and a three-week low of $12 at the Japan Korea Marker (JKM) benchmark in Asia .

Sign up here.

https://www.reuters.com/business/energy/us-natgas-prices-ease-rising-output-lower-lng-feedgas-2024-07-10/