Adds latest prices

By Scott DiSavino

Oct 31 (Reuters) -U.S. natural gas futures dropped about 5%on Thursday due to an expected bigger-than-usual storage build and forecasts for mild weather to continue through mid-November.

That mild weather should keep heating demand lower than usual for this time of year and allow utilities to keep adding more gas into storage than normal for at least afew more weeks.

The U.S. Energy Information Administration (EIA) said utilities added 78 billion cubic feet (bcf) of gas into storage during the week ended Oct. 25.

That was a little less than the 82-bcf build analysts forecast in a Reuters poll and compared with an increase of 77 bcf in the same week last year and a five-year (2019-2023) average rise of 67 bcf for this time of year. EIA/GAS NGAS/POLL

It was the first time utilities added more gas into storage than usual for two weeks in a row since October 2023. Those injections boosted stockpiles to about 5% above the five-year average.

Prior to last week, storage injections had been smaller than usual for 14 consecutive weeksbecause many producers reduced drilling activities 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.

Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange fell 13.8 cents, or 4.9%, to settle at $2.707 per million British thermal units (mmBtu).On Wednesday, the contract closed at its highest price since Oct. 4.

For the month, the front-month was down about 7% after soaring 37% in September.

SUPPLY AND DEMAND

Financial group LSEG said average gas output in the Lower 48 U.S. states eased to 101.7 billion cubic feet per day (bcfd) so far in October, down from 101.8 bcfd in September. That compared with a record 105.5 bcfd in December 2023.

On a daily basis, however, output was on track to drop by about 2.3 bcfd over the past three days to a preliminary two-week low of 101.0 bcfd on Thursday. Analysts noted preliminary data was often revised later in the day.

With so many firms curtailing drilling activities, analysts projected average output in calendar 2024 will decline for the first time since 2020 when the COVID pandemic cut demand for the fuel.

Looking ahead, however, analysts projected producers would boost output later this year and in 2025 to meet rising liquefied natural gas (LNG) export demand with two new export plants - Venture Global LNG's Plaquemines in Louisiana and Cheniere Energy's LNG.N Corpus Christi stage 3 expansion in Texas - expected to start producing LNG later this year.

Meteorologists projected the weather in the Lower 48 states would remain warmer than normal through at least Nov. 15. But even warmer-than-normal weather in early November is cooler than warmer-than-normal weather in late October.

So with seasonally cooler weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 99.5 bcfd this week to 100.9 bcfd next week. The forecast for next week was lower than LSEG's outlook on Wednesday.

The amount of gas flowing to the seven big U.S. LNG export plants roseto an average of 13.1 bcfd so far in October, up from 12.7 bcfd in September. That compares with a monthly record high of 14.7 bcfd in December 2023.

Reporting by Scott DiSavino; Editing by Kirsten Donovan, Paul Simao and Diane Craft

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

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NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

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