Adds latest prices

By Scott DiSavino

May 16 (Reuters) - U.S. natural gas futures eased about 1% to a two-week low on Friday on a smaller decline in output than previously expected, lower gas flows to liquefied natural gas $(LNG)$ export plants and forecasts for less demand in two weeks.

That should translate into extra supplies that will allow utilities to keep injecting more gas into storage than usual for this time of year.

Gas futures NGc1 for June delivery on the New York Mercantile Exchange fell 1.9 cents, or 0.6%, to settle at $3.343 per million British thermal units, their lowest close since April 30 for a second day in a row.

That put the front-month down about 12% for the week after soaring about 29% over the prior two weeks.

Despite a heat wave in Texas this week, analysts said heating and cooling demand should remain low across much of the rest of the country in coming weeks, allowing utilities to keep adding more gas into storage than normal for this time of year.

Gas stockpiles were around 3% above the five-year (2020-2024) normal. EIA/GAS GAS/POLL

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 103.7 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.

On a daily basis, output was on track to drop to a preliminary one-week low of 103.1 bcfd on Friday. But that decline was smaller than previously expected. Analysts have noted that preliminary data is often revised later in the day.

Part of the reason for output reductions was spring maintenance on some gas pipes, including U.S. energy firm Kinder Morgan's KMI.N 2.7-bcfd Permian Highway from the Permian basin in West Texas to the Texas Gulf Coast.

Kinder Morgan said it will perform a turbine exchange at the Big Lake compressor station from May 13-26 that will reduce mainline capacity to around 2.2 bcfd.

Traders have noted the Permian Highway reduction trapped some gas in the Permian basin, helping spot gas prices at the Waha Hub NG-WAH-WTX-SNL in West Texas to drop to around 94 cents per mmBtu on Friday, down from $1.58 For Thursday and an average of $1.87 over the prior seven days.

LSEG forecast average gas demand in the Lower 48, including exports, will hold around 96.3 bcfd this week and next before easing to 94.0 bcfd in two weeks.

The average amount of gas flowing to the eight big LNG export plants operating in the U.S. fell to 15.1 bcfd so far in May, down from a monthly record of 16.0 bcfd in April.

The LNG feedgas decline so far this month was mostly due to reductions for maintenance at Cameron LNG's 2.0-bcfd plant in Louisiana and Cheniere Energy's LNG.N 3.9-bcfd Corpus Christi plant under construction and in operation in Texas, and brief reductions at Freeport LNG's 2.1-bcfd plant in Texas.

LSEG said gas flows to Corpus were on track to hold near a two-month low of 1.5 bcfd for a third day in a row on Friday, down from 1.6 bcfd on Tuesday and an average of 2.0 bcfd during the prior seven days, while feedgas to Freeport was on track to rise to a four-month high of 2.2 bcfd on Friday, up from 1.5 bcfd on Thursday and an average of 2.0 bcfd over the prior seven days.

(Reporting by Scott DiSavino; editing by Barbara Lewis and Nick Zieminski)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))

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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