Updates prices to afternoon trading

By Scott DiSavino

June 25 (Reuters) -U.S. natural gas futures slid about 2% on Tuesday on a slow increase in output and forecasts for less demand over the next two weeks than previously expected even as a brutal heat wave blankets much of the country.

That heat is causing power generators to burn more gas to meet rising demand for electricity to keep air conditioners humming.

On its second to last day as the front-month, gas futures NGc1 for July delivery on the New York Mercantile Exchange fell 5.5 cents, or 2.0%, to settle at $2.756 per million British thermal units (mmBtu).

Futures for August NGQ24, which will soon be the front-month, were down about 3% to $2.86 per mmBtu.

Inthe spot market, meanwhile, gas prices at the Waha hub NG-WAH-WTX-SNL in West Texas turned negative for the first time since May as pipe maintenance trapped gas in the Permian Shale even as demand soars as consumers crank up their air conditioners to escape the heat wave.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 98.5 billion cubic feet per day (bcfd) so far 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.

On a daily basis, however, output was on track to fall by about 3.0 bcfd to a preliminary one-week low of 97.4 bcfd on Tuesday, down from an 11-week high of 100.4 bcfd on Monday. Analysts at LSEG notedpreliminary output numbers are often revised up later in the day.

Analysts said the production increase, which started in late May, was a sign that some drillers were slowly boosting output after a 47% jump in futures prices in April and May. Prices were also up about 5% so far in June.

So far in June, CEOs at EQT EQT.N and Chesapeake Energy CHK.O said their companies have started to boost output.

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

Chesapeake is on track to overtake EQT as the biggest U.S. gas producer after Chesapeake completes its planned merger with Southwestern Energy SWN.N.

Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 10.

But with less heat forecast next week, LSEG forecast average gas demand in the Lower 48, including exports, will slide from 103.0 bcfd this week to 100.3 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.

Gas flows to the seven big U.S. LNG export plants held at 12.9 bcfd so far in June, the same as in May.

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

Reporting by Scott DiSavino; Editing by Shailesh Kuber, Vijay Kishore and Nick Zieminski

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