Adds latest prices

By Scott DiSavino

July 25 (Reuters) -U.S. natural gas futures fell about 4% to a one-week low on Thursday on a bigger-than-expected storage build, rising output and forecasts for less demand next week than previously projected.

Despite the larger build, traders noted it was still smaller than usual for this time of year for the 10th time in 11 weeks.

Recent storage builds have mostly been smaller than usual because several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March, traders said.

Higher prices in April and May, however, prompted some drillers, including EQT EQT.N and Chesapeake Energy CHK.O, to boost output.

The U.S. Energy Information Administration forecast utilities added 22 billion cubic feet (bcf) of gas into storage during the week ended July 19. Analysts in a Reuters poll had forecast a 16-bcf build.

The EIA forecast compares with an increase of 23 bcf in the same week last year and a five-year (2019-2023) average rise of 31 bcf for this time of year. EIA/GAS NGAS/POLL

Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange fell 7.6 cents, or 3.6%, to settle at $2.041 per million British thermal units (mmBtu), theirlowest close since July 17 for a second day in a row.

That puts the contract within a penny of the 11-week closing low of $2.035 per mmBtu on July 17.

That price decline came despite the latest weather forecast calling for extreme heat to return in August, which should boost the amount of gas power generators burn to produce electricity to keep air conditioners humming.

Meteorologists forecast temperatures across the Lower 48 states will average around 83 degrees Fahrenheit (28.3 Celsius) on Aug. 2, according to LSEG data.

That would match the current record high average temperature set on July 20, 2022, when power demand peaked at an all-time high of 742,600 megawatts, according to LSEG and federal energy data.

In addition to the heat, power generators were burning more gas this week after the amount of electricity produced by wind farms in the Lower 48 states fell to a preliminary 59-month low on Tuesday.

That drop in wind power came even though energy firms have added about 53.3 gigawatts of wind over the past five years (2019-2023), bringing total wind capacity up to around 147.6 GW by the end of 2023, according to EIA data.

That is an average capacity increase of about 9% a year over the past five years and makes wind power the nation's third largest source of power capacity behind gas at 490.8 GW and coal at 177.1 GW.

Power companies get a lot more energy out of those gas and coal plants. Gas was producing about 49% of the country's power so far this week, with the rest coming from coal at 18%, nuclear at 18%, hydro and solar at 5% each, wind at 3% and other at 1%.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 states rose to an average of 102.4 billion cubic feet per day so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.4 bcfd in May.

U.S. output hit a monthly record high of 105.5 bcfd in December 2023.

With more wind power expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will ease from 105.5 bcfd this week to 105.3 bcfd next week. The forecast for this week was higher than LSEG's outlook on Wednesday, while the forecast for next week was lower.

Reporting by Scott DiSavino; Editing by Nick Zieminski, Bill Berkrot and Diane Craft

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

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