UPDATE 1-US natgas prices ease 1% on oversupply of fuel in storage

(Adds latest prices) By Scott DiSavino May 8 (Reuters) - U.S. natural gas futures eased about 1% on Wednesday as the market took a break after hitting a 14-week high on worries the tremendous oversupply of gas in storage will increase. Analysts forecast gas stockpiles were about 34% above normal for this time of year. Prices eased despite another decline in output, forecasts for higher demand over the next two weeks than previously expected, an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants and as hot weather in Texas boosted the amount of gas power generators burn to keep air conditioners humming. Front-month gas futures for June delivery on the New York Mercantile Exchange fell 2.0 cents, or 0.9%, to settle at $2.187 per million British thermal units (mmBtu). On Tuesday, the contract closed at its highest since Jan. 29. The front-month remained in technically overbought territory for a fourth day in a row for the first time since January. Traders noted that if U.S. crude prices continue to decline - crude futures were down about 9% over the past five weeks - some drillers could cut back on oil production in shale basins that also produce a lot of associated gas, like the Permian in Texas and New Mexico and the Bakken in North Dakota. Any reduction in associated gas could cause overall gas output to decline since high crude prices enable energy firms to keep making money by drilling for oil even when gas prices are negative like they have been at the Waha hub in West Texas in recent days. In Texas, the Electric Reliability Council of Texas (ERCOT) issued a Weather Watch for Wednesday "due to unseasonably high temperatures, high levels of expected maintenance outages during the spring shoulder months, and the potential for lower reserves." That heat caused next-day power prices at the ERCOT North hub , which includes Dallas, to soar to an eight-month high of $400 per megawatt hour for Wednesday, up from $37 for Tuesday. SUPPLY AND DEMAND Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 96.8 billion cubic feet per day (bcfd) so far in May, down from 98.1 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, output was on track to drop by around 3.5 bcfd over the past four days to a preliminary 16-week low of 94.3 bcfd on Wednesday. LSEG forecast gas demand in the Lower 48, including exports, would slide from 93.7 bcfd this week to 90.9 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday. Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.4 bcfd so far in May with the return of Freeport LNG's plant in Texas from maintenance and inspection work. That compares with a monthly record of 14.7 bcfd in December. The amount of gas flowing to the 2.1-bcfd Freeport plant was on track to hold near a two-month high of 1.4 bcfd for a fourth day in a row on Wednesday, up from an average of 0.4 bcfd in April. U.S. energy company New Fortress Energy said it expects to produce first LNG at its Altamira export plant in Mexico, which will source much of its gas from the U.S., later in May and export the first cargo in June. Week ended Week ended Year ago Five-year May 3 Apr 26 May 3 average Forecast Actual May 3 U.S. weekly natgas storage change (bcf): +85 +59 +71 +81 U.S. total natgas in storage (bcf): 2,569 2,484 2,119 1,923 U.S. total storage versus 5-year average 34.9% 34.0% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year Last Year Average Average 2023 (2018-2022) Henry Hub 2.27 2.21 2.30 2.66 3.60 Title Transfer Facility (TTF) 9.68 9.65 9.97 13.04 14.39 Japan Korea Marker (JKM) 10.50 10.47 10.45 14.39 14.31 LSEG Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year Norm Norm U.S. GFS HDDs 43 44 48 75 68 U.S. GFS CDDs 89 89 83 73 77 U.S. GFS TDDs 132 133 131 148 145 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year (2019-2023) Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 96.8 96.9 97.2 102.4 94.4 U.S. Imports from Canada 7.2 7.4 6.9 7.3 7.5 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0 Total U.S. Supply 103.9 104.3 104.1 109.7 101.9 U.S. Demand (bcfd) U.S. Exports to Canada 2.1 2.1 2.1 1.8 2.4 U.S. Exports to Mexico 5.8 6.5 6.5 6.3 5.6 U.S. LNG Exports 12.3 12.3 11.9 13.0 8.8 U.S. Commercial 5.9 5.6 5.2 5.4 5.8 U.S. Residential 6.3 6.0 5.0 5.8 6.9 U.S. Power Plant 30.6 32.6 31.7 31.0 28.4 U.S. Industrial 21.8 21.8 21.7 21.4 21.5 U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.8 U.S. Pipe Distribution 1.9 1.9 1.9 1.9 1.9 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 71.5 72.8 70.4 70.4 69.4 Total U.S. Demand 91.8 93.7 90.9 91.5 86.2 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 76 77 83 107 81 Jan-Jul 77 78 77 102 79 Oct-Sep 79 80 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended May 10 May 3 Apr 26 Apr 19 Apr 12 Wind 14 14 16 16 16 Solar 5 6 6 6 6 Hydro 7 7 7 7 7 Other 1 2 1 2 1 Petroleum 0 0 0 0 0 Natural Gas 40 40 37 37 37 Coal 13 13 13 13 13 Nuclear 19 19 19 20 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.95 1.88 Transco Z6 New York 1.65 1.67 PG&E Citygate 2.37 2.40 Eastern Gas (old Dominion South) 1.54 1.57 Chicago Citygate 1.66 1.60 Algonquin Citygate 1.73 1.64 SoCal Citygate 1.63 1.68 Waha Hub -1.63 -2.72 AECO 1.02 0.98 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 35.25 29.75 PJM West 45.00 36.50 Ercot North 399.75 36.00 Mid C 30.25 23.50 Palo Verde 7.00 -2.00 SP-15 5.75 -3.25 (Reporting by Scott DiSavino, Editing by Nick Zieminski and David Gregorio)