Adds latest prices

By Scott DiSavino

June 20 (Reuters) -U.S. natural gas futures dropped about 6% to a two-week low onThursday withproducers, including EQT EQT.N and Chesapeake Energy CHK.O, slowly increasingoutput to meet higher demand aspower generators burn more gas to meet rising air conditioning use.

Front-month gas futures NGc1 for July delivery on the New York Mercantile Exchange fell 16.8 cents, or 5.8%, to settle at $2.741 per million British thermal units (mmBtu), their lowest close since June 4.

Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 98.2 billion cubic feet per day (bcfd) so far in June from a 25-month low of 98.1 bcfd in May. That compares with a monthly record high of 105.5 bcfd in December 2023.

Analysts said the production increase, which started in late May,was a sign drillers were slowly boosting output after a 47% jump in futures prices in April and May. Prices were also up about 10% so far in June.

On a daily basis, output hit a 10-week high of 99.6 bcfd on June 17.

Overall, however, U.S. gas production was still down around 8% so far in 2024 after several energy firms, including EQT and Chesapeake Energy CHK.O, delayed well completions and cut drilling activities when prices fell in February and March.

Earlier this week, Chesapeake CEO Nick Dell'Osso said at a fireside chat with JP Morgan that Chesapeake will be ready to provide additional gas supplies to help meet the expected spike in power demand during an upcoming heatwave.

Dell'Osso said Chesapeake curtailed about 0.5 bcfd of production earlier this year. He said curtailments will decline through the quarter, with none expected by the end of the year, subject to market conditions.

EQT EQT.N CEO Toby Rice saidearlier this monththat EQT has already startedboosting output.

Chesapeake will overtake EQT as the biggest U.S. gas producerafter its planned merger with Southwestern Energy SWN.N.

TROPICAL UPDATE

In other news, the U.S. National Hurricane Center (NHC) projected a 50% chance a tropical cyclone would form in the Gulf of Mexico near Mexico's east coast over the next week and a 40% chance a cyclone would form in the Atlantic Ocean off the coasts of Florida and Georgia.

The NHC also said Tropical Storm Alberto weakened into a depression as it moved inland over central Mexico from the Gulf of Mexico.

Meteorologists projected weather across the Lower 48 states, meanwhile, would remain hotter than normal through at least July 5.

LSEG forecast that heat would boost the amount of gas power generators in the Lower 48 burn to keep air conditioners humming, including exports, from 97.8 bcfd this week to 103.8 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday before the U.S. Juneteenth holiday on Wednesday.

Gas flows to the seven big U.S. LNG export plants rose to 13.0 bcfd so far in June, up from 12.9 bcfd in May.

But that remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing plant and pipeline maintenance at several Louisiana facilities, including Cameron LNG, Cheniere Energy's LNG.N Sabine Pass, Venture Global's Calcasieu Pass.

Reporting by Scott DiSavino; Editing by Richard Chang

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