Adds latest prices

By Scott DiSavino

Oct 18 (Reuters) -U.S. natural gas futures fell about 4% to a five-week lowon Friday withforecasts formild weather expected tokeep heating demand low through early November.

Front-month gas futures NGc1 for November delivery on the New York Mercantile Exchange fell 8.9 cents, or 3.8%, to settle at $2.258 per million British thermal units (mmBtu), their lowest close since Sept. 10.

That kept the front month in technically oversold territory for a third day in a row for the first time since July.

For the week, the contract was down about 14%, its biggest weekly drop since early February.That also put the front-month down for a third week in a row, losing about 22% during that time.

Looking ahead, the market is showing signs of giving up on thoughts that extreme cold could cause prices to spike this winter with futures for March 2025 trading at a record low premium over April 2025 NGH25-J25 of just 6 cents per mmBtu.

March is the last month of the winter storage withdrawal season and April is the first month of the summer storage injection season. Since gas is primarily a winter heating fuel, traders have said summer prices should not trade above winter.

If the March-April 2025 contract trades in contango, with the April contract priced higher than March, it could be the earliest switch from backwardation, with the March contract priced higher than April, in recent years.

The March-April 2024 spread did not trade in contango until Dec. 13. That compares with Jan. 25 for the March-April 2023 spread, never for the March-April 2022 spread and Dec. 8 for the March-April 2021 spread, according to seasonality data from LSEG.

The industry calls the March-April spread the "widow maker" because rapid price moves on changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.

SUPPLY AND DEMAND

Financial group LSEG said average gas output in the Lower 48 U.S. states slipped to 101.4 billion cubic feet per day (bcfd) so far in October, down from 101.8 bcfd in September. That compares with a record 105.5 bcfd in December 2023.

Analysts projected that 2024 would be the first time output declines since 2020, when the COVID-19 pandemic cut demand for the fuel.

That's because many producers reduced their drilling activities earlier this year after average spot monthly prices at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana fell to a 32-year low in March. Prices have remained relatively low since then.

Meteorologists projected the weather in the Lower 48 states will remain mostly warmer than normal through Nov. 2.

LSEG forecast that unseasonably warm weather would cause average gas demand in the Lower 48, including exports, to slide from 97.9 bcfd this week to 96.4 bcfd next week before rising to 99.9 bcfd in two weeks.

The forecasts for this week and next were similar to LSEG's outlook on Thursday.

The amount of gas flowing to the seven big U.S. LNG export plants rose to an average of 13.0 bcfd so far in October from 12.7 bcfd in September. That compares with a monthly record high of 14.7 bcfd in December 2023.

On a daily basis, LNG feedgas hit an eight-month high of 14.4 bcfd on Thursday.

Reporting by Scott DiSavino; editing by Barbara Lewis and Deepa Babington

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

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