UPDATE 1-US natgas futures slips as higher output offsets hotter weather outlook

(Adds comment and updates prices) July 5 (Reuters) - U.S. natural gas futures eased on Wednesday as higher output overshadowed forecasts for hotter-than-normal weather, particularly in Texas' natural gas-reliant power grid. Front-month gas futures for August delivery on the New York Mercantile Exchange traded 5.2 cents, or 1.9%, lower to settle at $2.657 per million British thermal units. "As far as elements go that might be driving the market in a more bearish direction, production has been pretty high recently," said John Abeln, analyst with data provider Refinitiv. "Both physical and financial trading were closed yesterday for the July 4th. Maybe some participants were waiting until today to make trades." Refinitiv said average gas output in the U.S. Lower 48 states was at 101.9 bcfd so far in July, compared with 100.9 bcfd in June and a record 102.5 bcfd in May. Last week, output stood at 100.6 bcfd. "Even though there is a large storage surplus, there are still uncertainties about the summer demand and tropical storms. I think gas prices are likely to experience some volatilities until the summer season is over, but the storage surplus will keep prices in check," said Zhen​ Zhu, managing consultant at C.H. Guernsey and Co in Oklahoma City. In Texas, power use remained high and reached record levels last week as a heat wave continued to bake the state, according to the state's grid operator, Electric Reliability Council of Texas (ERCOT). "We're seeing support in the natural gas markets from some heat on the maps coming back to Texas next week," said Gary Cunningham, director of market research at Tradition Energy. LIKELY DEMAND Refinitiv estimated 238 cooling degree days (CDDs) over the next two weeks in the lower 48 U.S. states, compared with the 30-year norm for this time of year of 199 CDDs. CDDs measure the number of degrees a day's average temperature is above 65 Fahrenheit (18 Celsius) and provide a snapshot into likely demand for cooling. Extreme heat boosts the amount of gas generators burn to produce power for air conditioning, especially in Texas, which gets most of its electricity from gas-fired plants. Data provider Refinitiv saw natural gas demand from U.S. power plants jumping to 45.6 billion cubic feet per day (bcfd) this week, compared with 40.6 bcfd last week. U.S. energy firms this week cut the number of oil and natural gas rigs operating for a ninth week in a row for the first time since July 2020, energy services firm Baker Hughes Co said in its closely followed report last week. "That gave the market the support it needed to just continue to hold again in the fair value band around the $2.75 mark," Cunningham said. Refinitiv forecast U.S. gas demand, including exports, would rise from 103.7 bcfd this week to 104.2 bcfd next week as the weather turns hotter. U.S. exports of liquefied natural gas fell 10% in June to 6.82 million tonnes (MT), from 7.58 MT the previous month, as plant maintenance curbed output and European demand slid, according to preliminary data from Refinitiv. British and Dutch gas prices were mixed due to rises in Norwegian pipeline supplies after maintenance, slower arrivals of liquefied natural gas (LNG), and lacklustre demand. Week ended Week ended Year ago Five-year Jun 30 Jun 23 Jun 30 average Forecast Actual Jun 30 U.S. weekly natgas storage change (bcf): 73 76 63 64 U.S. total natgas in storage (bcf): 2,878 2,805 2,302 2,511 U.S. total storage versus 5-year average 14.6% 14.6% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2017-2021) Henry Hub 2.71 2.70 7.60 6.54 2.89 Title Transfer Facility (TTF) 10.98 12.15 33.44 40.50 7.49 Japan Korea Marker (JKM) 12.08 12.24 29.72 34.11 8.95 Refinitiv 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 4 5 2 3 4 U.S. GFS CDDs 238 237 230 209 199 U.S. GFS TDDs 242 242 232 212 203 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Week Next Week This Week Five-Year Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 100.6 101.9 101.9 U.S. Imports from Canada 8.0 7.9 7.9 U.S. LNG Imports 0.0 0.0 0.0 Total U.S. Supply 108.6 109.8 109.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.0 2.4 2.4 U.S. Exports to Mexico 6.6 6.4 6.6 U.S. LNG Exports 11.8 13.0 13.3 U.S. Commercial 4.4 4.3 4.4 U.S. Residential 3.7 3.4 3.6 U.S. Power Plant 40.6 45.6 45.1 U.S. Industrial 21.3 21.2 21.4 U.S. Plant Fuel 5.0 5.0 5.0 U.S. Pipe Distribution 2.1 2.2 2.2 U.S. Vehicle Fuel 0.1 0.1 0.1 Total U.S. Consumption 77.2 82.0 81.8 Total U.S. Demand 97.6 103.7 104.2 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended July 7 Jun 30 Jun 23 Jun 16 Jun 9 Wind 5 10 9 8 5 Solar 4 4 4 5 5 Hydro 6 6 6 6 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 45 43 42 43 45 Coal 19 18 17 16 17 Nuclear 18 17 19 19 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.48 2.48 Transco Z6 New York 1.46 1.46 PG&E Citygate 3.85 3.85 Eastern Gas (old Dominion South) 1.40 1.40 Chicago Citygate 2.27 2.27 Algonquin Citygate 3.60 3.60 SoCal Citygate 3.40 3.40 Waha Hub 2.17 2.17 AECO 1.81 1.81 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 36.50 36.50 PJM West 32.75 32.75 Ercot North 65.25 65.25 Mid C 89.50 89.50 Palo Verde 49.75 49.75 SP-15 48.00 48.00 (Reporting by Deep Vakil and Ashitha Shivaprasad and Brijesh Patel in Bengaluru; Editing by Christina Fincher and David Holmes )