Adds latest prices

By Scott DiSavino

Aug 2 (Reuters) -U.S. natural gas futures held steadyon Friday, supported by rising gas flows toliquefied natural gas (LNG) export plants and forecasts fornear record-breaking heat over the next few days but pressured by rising output, formation of a likely demand-killing storm near Florida and a tremendous oversupply of gas in storage.

Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange fell 0.1 cents to settle at $1.967 per million British thermal units.

For the week, the contract declined about 2%, putting it down for a third week in a row and the seventh time in eight weeks. During those eight weeks, the contract has lost about 32%.

That near record-breaking heat could boost the amount of gas power generators burn to keep air conditioners humming over the next few days.

There was currently about 16% more gas in storage than is normal for this time of year. EIA/GAS NGAS/POLL

Storage builds havebeen smaller than normal in 11 of the past 12 weeks because several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March.

Higher prices in April and May, however, prompted some drillers, including EQT EQT.N and Chesapeake Energy CHK.O, to boost output. But after prices dropped 22% in July, some analysts said producers could keep their drilling activities lower for longer.

In other news, the U.S. National Hurricane Center said Tropical Depression 4, currently locatedover Cuba, would likely strengthen into a Tropical Storm on Saturday before hitting the West Coast of Florida on Sunday.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 states rose to an average of 103.8 billion cubic feet per day (bcfd) so far in August, up from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023.

Meteorologists slightly reduced their temperature forecasts for the Lower 48 states, which is part of the reason power demand did not hit an all-time high on Thursday as some analysts predicted.

The forecasters now expect temperatures across the country to rise from an average of 82.6 degrees Fahrenheit (28.1 Celsius) on Thursday to 82.7 F on Friday and 82.8 F on Monday, according to LSEG data.

That would remain below the daily record high average temperature of 83.0 F set on July 20, 2022, when power demand peaked at an all-time high of 742,600 megawatts, LSEG and federal energy data showed. U.S. power demand, however, could still hit a record high on Friday or Monday.

To keep air conditioners humming during near record heat, LSEG forecast power generators would burn about 55.3 bcfd of gas on Friday, which would top the all-time high of 54.1 bcfd reached on July 9 when generators had to burn more gas due to a lack of wind power. But the amount of wind power was on track to rise from 4% last week to around 10% this week.

Even though meteorologists forecast it would be slightly hotter on Monday, generators were only expected to burn about 53.8 bcfd of gas.

With more heat coming, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 105.5 bcfd this week to 110.8 bcfd next week before sliding to 106.1 bcfd in two weeks. The forecast for next week was higher than LSEG's outlook on Thursday.

Gas flows to the seven big U.S. LNG export plants rose to 12.8 bcfd so far in August, up from 11.9 bcfd in July when Freeport shut for nine days for Hurricane Beryl. That compares with a monthly record high of 14.7 bcfd in December 2023.

Reporting by Scott DiSavino
Editing by Marguerita Choy and David Gregorio

For gas data on LSEG's Eikon 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 Eikon 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