Adds latest prices

By Scott DiSavino

July 16 (Reuters) -U.S. natural gas futures edged up about 1% on Tuesday from a 10-week low in the prior session after power demand hit a record high on Monday as homes and businesses cranked up their air conditioners to escape the hottest day so far this summer.

That increase in gas prices came despite forecasts for less demand this week than previously projected due primarily to the slower than expected return to full power of Freeport LNG's export plant in Texas.

Traders also noted that gas prices have been depressed for four of the past five weeks due to rising output and the persistent oversupply of gas still in storage versus normal for this time of year.

Analysts said there was currently about 18% more gas in storage than is normal. EIA/GAS NGAS/POLL

Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange rose 3.0 cents, or 1.4%, to settle at $2.188 per million British thermal units (mmBtu). On Monday, the contract fell about 7% to close at its lowest level since May 3.

Despite the small price increase, the front-month remained in technically oversold territory for a second day in a row and an eighth time in the past 10 trading days.

In the spot market, high cooling demand during the heat wave boosted next-day power prices in New England EL-PK-NPMS-SNL and the Pennsylvania-New Jersey-Maryland region EL-PK-PJMW-SNL by over 150% to their highest levels since January.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 102.2 bcfd so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.

Several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March. But higher prices in April, May and June prompted some drillers, including EQT EQT.N and Chesapeake Energy CHK.O, to return to the well pad.

EQT is the nation's biggest gas producer, and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy SWN.N.

Meteorologists projected weather across the Lower 48 states would remain mostly hotter than normal through at least July 31.

That heat will likely force power generators to continue burning lots of gas to produce electricity to keep air conditioners humming. Power generators burned a daily record of 54.1 bcfd of gas on July 9, according to LSEG data.

But with less hot weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will slide from 105.1 bcfd this week to 103.6 bcfd next week. The forecast for this week was lower than LSEG's outlook on Monday.

Gas flows to the seven big U.S. LNG export plants fell to 11.8 bcfd so far in July after Freeport LNG in Texas shut ahead of Hurricane Beryl on July 7, 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 Ros Russell and Daniel Wallis

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

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