Adds latest prices

By Scott DiSavino

Aug 29 (Reuters) -U.S. natural gas futures climbed about 2%on Thursday on a decline in daily output and a smaller-than-expected weekly storage build.

That price increase came despiteforecasts for less demand next week than previously expected.

The U.S. Energy Information Administration (EIA) said utilities added 35 billion cubic feet (bcf) of gas into storage during the week ended Aug. 23.

That was less than the 39-bcf build analysts forecast in a Reuters poll and compares with an increase of 28 bcf in the same week last year and a five-year (2019-2023) average rise of 43 bcf for this time of year. EIA/GAS NGAS/POLL

Energy traders noted the storage increase wassmaller than normal for the 15th time in 16 weeks after lower prices earlier in the yearprompted several producers to cut output.

On its first day as the front-month, gas futures NGc1 for October delivery on the New York Mercantile Exchange rose 4.0 cents from where the October contract closed on Wednesday to settle at $2.137 per million British thermal units on Thursday, their highest close since Aug. 22.

That was up about 11% from Wednesday's settle when the less expensive September contract was still the front-month.

In the spot market, pipeline constraints caused next-day gas prices at the Waha hub NG-WAH-WTX-SNL in the Permian Shale in West Texas to average in negative territory again for a record 31st time this year.

Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six times in 2020 and once in 2023.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states slid to an average of 102.4 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July.

On a daily basis, output was on track to drop by about 1.7 bcfd over the past two days to a preliminary two-month low of 101.0 bcfd on Thursday. Analysts have noted that preliminary data is often revised later in the day.

Meteorologists forecast weather across the country would remain mostly hotter than normal through Sept. 13. Energy traders, however, noted that hot weather at the start of September would only average around 77 degrees F (25.0 Celsius), versus 83 F (28.3 C) at the start of August.

LSEG forecast average gas demand in the Lower 48, including exports, will slide from 105.8 bcfd this week to 102.4 bcfd next week. Those forecasts were lower than LSEG's outlook on Wednesday.

Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants rose to an average of 12.8 bcfd so far in August, up from 11.9 bcfd in July. That compares with a monthly record high of 14.7 bcfd in December 2023.

Freeport LNG's export plant in Texas was on track to return to service on Thursday after shutting on Wednesday, according to LSEG data.

QatarEnergy/Exxon Mobil's XOM.N Golden Pass LNG venture asked U.S. federal energy regulators for three more years until 2029 to complete its export plant under construction in Texas. The venture said the current federal authorization to finish the plant in November 2026 did not provide enough time.

Reporting by Scott DiSavino, Editing by Nick Zieminski, Paul Simao and Cynthia Osterman

For gas data on the LSEG terminal 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 LSEG 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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