Adds latest prices

By Scott DiSavino

July 1 (Reuters) -U.S. natural gas futures fell about 5% to a six-week low on rising output in recent weeks, forecasts for less demand over the next two weeks than previously expected and an ongoing oversupply of gas in storage.

Analysts forecast there was still about 19% more gas in storage than usual for this time of year even though output reductions earlier in 2024 helped keep weekly injections below normal over the past seven weeks. EIA/GAS NGAS/POLL

That price decline came even though a heat wave blanketing much of the country for weeks will linger through at least mid-July, forcing power generators to continue burning lots of gas to keep air conditioners humming.

Looking beyond the current heat wave, analysts at energy consulting firm EBW Analytics said "storm clouds remain on the horizon (for gas prices) with high gas inventories, rising gas production, and tropical demand destruction risks rising into late summer."

Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange fell 12.3 cents, or 4.7%, to settle at $2.478 per million British thermal units (mmBtu), their lowest close since May 15.

In Texas, the Electric Reliability Council of Texas (ERCOT), the power grid operator for most of the state, said peak demand came close but did not break the record for the month of June last week, as had been expected.

ERCOT, however, projects demand will break the July record on Tuesday as homes and businesses crank up their air conditioners to escape the heat blanketing the state.

In the Caribbean Sea, Hurricane Beryl, an extremely dangerous major hurricane, was expected to pass Jamaica on Wednesday and slam into Mexico's Yucatan Peninsula on Friday before weakening to a tropical storm and entering the Bay of Campeche in the Gulf of Mexico, where Mexico produces much of its oil, on Saturday.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 98.8 billion cubic feet per day (bcfd) in June, up 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.

Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 16.

With hotter weather expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 99.8 bcfd this week to 105.8 bcfd next week. Those forecasts were lower than LSEG's outlook on Friday.

Gas flows to the seven big U.S. LNG export plants eased to 12.8 bcfd in June, down from 12.9 bcfd in May and a monthly record high of 14.7 bcfd in December 2023.

That decline was due to plant and pipeline maintenance at several facilities, including Freeport LNG and Cheniere Energy's LNG.N Corpus Christi in Texas and Cameron LNG, Cheniere's Sabine Pass and Venture Global's Calcasieu Pass in Louisiana.

Feedgas to the 2.1-bcfd Freeport, one of the most watched U.S. LNG plants because it has a history of swaying global gas prices when it shuts, was on track to rise to 1.9 bcfd on Monday after dropping to an eight-week low of 1.3 bcfd on Sunday, according to LSEG data.

That compares with an average of 1.8 bcfd over the prior seven days. Freeport told Texas environmental regulators that the second of three liquefaction trains tripped on June 29 due to issues with compressor systems.

Reporting by Scott DiSavino; Editing by Jonathan Oatis and David Holmes

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