By Scott DiSavino

July 18 (Reuters) -U.S. natural gas futures climbed about 2% on Thursday after dropping to a 10-week low in the prior session ahead of a federal report expected to show last week's storage build was smaller than usual for a ninth time in 10 weeks.

Prices were also boosted by bullish forecasts for hot weather to return in late July and early August, which should increase the amount of gas power generators burn to keep air conditioners humming.

Traders said 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. Higher prices in April and May, however, prompted some drillers, including EQT <EQT.N > and Chesapeake Energy CHK.O, to return to the well pad.

Analysts forecast U.S. utilities added 27 billion cubic feet (bcf) of gas into storage during the week ended July 12. That compares with an increase of 43 bcf in the same week last year and a five-year (2019-2023) average rise of 49 bcf for this time of year. EIA/GAS NGAS/POLL

If correct, that will leave gas stocks about 18% above normal for this time of year.

Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange were up 4.2 cents, or 2.1%, to $2.077 per million British thermal units (mmBtu) at 9:20 a.m. EDT (1320 GMT).

On Wednesday, the front-month fell about 7% and closed at its lowest level since May 2 on forecasts for cooler weather over the next two weeks than previously expected and a drop in feedgas to liquefied natural gas (LNG) export plants due primarily to the shutdown of Freeport LNG in Texas for Hurricane Beryl.

Despite the price increase on Thursday, the contract remained in technically oversold territory for a fourth day in a row for the first time since February.

Recent declines in the August front-month contract boosted the premium of futures for September over August NGQ24-U24 to a record high of around 3.6 cents per mmBtu. The August contract usually trades at a premium over September. The September contract has only traded above the August one 41 times over the past 983 trading days, according to data from financial firm LSEG going back to 2020.

In other news, the U.S. Energy Information Administration (EIA) revised peak hourly power demand on Monday down to 738,596 megawatts (MW), which would not break the prior all-time high of 742,600 MW set on July 20, 2022 as previously projected earlier this week, and would only be the highest since usage peaked at 741,815 MW on July 27, 2023.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states has risen to an average of 102.2 bcfd so far in July, up from an average of 100.1 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.

Meteorologists projected weather across the Lower 48 states would remain mostly near normal through July 25 before turning hotter than normal through at least Aug. 2.

With less hot weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will slide from 105.6 bcfd this week to 103.6 bcfd next week.

Gas flows to the seven big U.S. LNG export plants have fallen to 11.6 bcfd so far in July due mostly to the Freeport outage, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.

Reporting by Scott DiSavino; Editing by Paul Simao

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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NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

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