Adds latest prices

By Scott DiSavino

May 28 (Reuters) -U.S. natural gas futures climbed about 3% on Tuesday on forecasts for more demand over the next two weeks than previously expected and as more gas flowed to liquefied natural gas (LNG) export plants.

Prices rose despite signs that some drillers were starting to pull more gas out of the ground and the tremendous oversupply of gas still in storage.

Analysts forecast gas stockpiles were about 27% above normal levels for this time of year. EIA/GAS NGAS/POLL

On its second to last day as the front-month, gas futures NGc1 for June delivery on the New York Mercantile Exchange rose 7.0 cents, or 2.8%, to settle at $2.590 per million British thermal units (mmBtu).

Futures for July NGN24, which will soon be the front-month, were up about 2.0% at $2.83 per mmBtu.

Power demand in Texas hit records for the month of May four times in a row over the long Memorial Day weekend as homes and businesses cranked up their air conditioners to escape a brutal heat wave. The heat was finally broken by storms that then left over 939,000 homes and businesses without power from Texas to West Virginia.

In the spot market, next-day gas prices in Southern California fell to a record low, while power in Arizona and California remained in negative territory amid low energy demand and ample cheap hydropower and other renewable supplies.

SUPPLY AND DEMAND

Gas output in the Lower 48 U.S. states fell to an average of 97.7 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in April, according to financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023.

On a daily basis, output was up about 1.5 bcfd since hitting a 15-week low of 96.3 bcfd on May 1. Energy traders said that increase was a sign that the 56% gain in futures prices over the past four weeks prompted some drillers to start producing more gas.

Overall, however, U.S. gas production remained down around 8% so far in 2024 as several energy firms, including EQT EQT.N and Chesapeake Energy CHK.O, delayed well completions and cut other drilling activities after prices fell to 3-1/2-year lows in February and March.

LSEG forecast gas demand in the Lower 48, including exports, would hold near 93.7 bcfd over the next two weeks. Those forecasts were higher than LSEG's outlook on Friday.

Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.8 bcfd so far in May with the return of Freeport LNG's 2.1-bcfd plant in Texas.

That LNG feedgas, however, remained down from the monthly record of 14.7 bcfd in December due to ongoing spring maintenance at Kinder Morgan's KMI.N Elba Island in Georgia and several plants in Louisiana, including Cameron LNG, Cheniere Energy's LNG.N Sabine Pass and Venture Global's Calcasieu Pass.

U.S. exports to Mexico rose to an average of 7.2 bcfd so far in May, up from 6.5 bcfd in April and the current monthly record of 7.0 bcfd in August 2023. Analysts said that signaled that U.S. energy firm New Fortress Energy NFE.O was preparing to turn U.S. gas into LNG at its export plant in Altamira, Mexico.

Reporting by Scott DiSavino; Editing by David Gregorio and Bill Berkrot

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