UPDATE 1

(Updates prices in paragraph 2) Aug 2 (Reuters) - U.S. natural gas futures extended losses to a near one-week low on Wednesday, weighed down by forecasts for lower demand over the next two weeks than previously expected and rising output. The price drop came despite forecasts for hotter than normal weather continuing through mid-August, especially in Texas. Front-month gas futures for September delivery on the New York Mercantile Exchange settled 8.3 cents, or 3.2%, lower at $2.477 per million British thermal units (mmBtu). "Even with the record high temperatures and record power generation demand, the market fails to rally because we've seen some very strong production numbers here in the US," said Phil Flynn, an analyst at Price Futures Group. "We're going to be locked in the $0.20 range and there's limited downside from here and a little bit more upside though we're not looking for a major move in either direction," Flynn added. Demand for power in Texas hit a record high on Tuesday for the second day in a row, and will likely break that high on Wednesday and next week as homes and businesses keep their air conditioners cranked up to escape a lingering heat wave, according to forecasts by the Electric Reliability Council of Texas (ERCOT), the state's power grid operator. Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed. That Texas record came a few days after overall U.S. power demand hit its highest so far this year (and second highest ever) on July 27 - the hottest day this summer, according to data from the U.S. Energy Information Administration (EIA) going back to 2016. EIA said power use hit 14.7 million megawatt hours (MWh) on July 27, just shy of the 14.8-million MWh record on July 20, 2022. Data provider Refinitiv said temperatures in the U.S. Lower 48 states averaged 82.2 degrees Fahrenheit (27.9 Celsius) on July 27, a little short of the record 83.0 F on July 20, 2022, according to data going back to 2018. SUPPLY AND DEMAND Refinitiv said average gas output in the Lower 48 states rose to 101.7 bcfd in July, up from 101.0 bcfd in June but just shy of the 101.8-bcfd monthly record set in May due to pipeline maintenance earlier in the month. On a daily basis, however, output was on track to drop by 1.6 bcfd to a preliminary more than one-week low of 100.4 bcfd on Wednesday. Meteorologists forecast the weather in the Lower 48 states will remain mostly hotter than normal through at least Aug. 16. With more hot weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise slightly from 104.9 bcfd this week to 105 bcfd next week as power generators burn more of the fuel to meet rising air conditioning demand. Those forecasts were lower than Refinitiv's outlook on Tuesday. Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants rose to an average of 12.7 bcfd in July, up from 11.6 bcfd in June. That, however, was still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities. Week ended Week ended Year ago Five-year Jul 28 Jul 21 Jul 28 average Forecast Actual Jul 28 U.S. weekly natgas storage change (bcf): 17 16 37 37 U.S. total natgas in storage (bcf): 3,004 2,987 2,451 2,679 U.S. total storage versus 5-year average 12% 13.1% 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 2.52 2.65 8.78 6.54 2.89 Title Transfer Facility (TTF) 9.35 9.17 69.68 40.50 7.49 Japan Korea Marker (JKM) 10.93 10.92 53.22 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 1 2 1 3 4 U.S. GFS CDDs 238 236 222 203 196 U.S. GFS TDDs 239 238 223 206 200 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 101.4 102.2 102.5 99.0 92.0 U.S. Imports from Canada 7.6 7.5 7.5 8.9 8.1 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 109.0 109.6 110.0 107.9 100.8 U.S. Demand (bcfd) U.S. Exports to Canada 1.6 1.7 1.5 2.5 2.5 U.S. Exports to Mexico 6.6 6.4 6.7 5.7 5.6 U.S. LNG Exports 12.6 12.7 13.0 9.8 6.1 U.S. Commercial 4.4 4.4 4.4 4.4 4.5 U.S. Residential 3.5 3.5 3.5 3.5 3.4 U.S. Power Plant 48.3 47.5 47.2 44.4 41.2 U.S. Industrial 21.3 21.4 21.3 21.4 21.5 U.S. Plant Fuel 5.0 5.0 5.1 5.0 5.0 U.S. Pipe Distribution 2.3 2.2 2.2 2.2 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 84.9 84.2 83.9 81.0 78.0 Total U.S. Demand 105.8 104.9 105.0 99.0 92.2 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Aug 4 Jul 28 Jul 21 Jul 14 Jul 7 Wind 6 7 7 7 6 Solar 4 4 4 4 4 Hydro 5 5 6 6 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 45 45 46 45 45 Coal 20 20 19 19 19 Nuclear 17 16 17 17 18 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.49 2.58 Transco Z6 New York 1.10 1.18 PG&E Citygate 5.05 5.14 Eastern Gas (old Dominion South) 1.05 1.17 Chicago Citygate 2.24 2.32 Algonquin Citygate 1.60 1.47 SoCal Citygate 7.90 8.09 Waha Hub 2.16 0.47 AECO 2.39 1.83 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day New England 28.50 32.50 PJM West 32.25 37.75 Ercot North 69.00 69.00 Mid C 75.25 109.33 Palo Verde 63.75 83.75 SP-15 72.25 95.50 (Reporting by Brijesh Patel and Rahul Paswan in Bengaluru; Editing by Alexander Smith and Susan Heavey)

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