Corrects March 14 copy to say 5% not 8% in the headline, lead paragraph and second paragraph

March 14 (Reuters) -U.S. natural gas futures rebounded from an early two-week low to gain 5%on Thursday after a weekly report showed a larger-than-expected storage withdrawal last week.

Front-month gas futures NGc1 for April delivery on the New York Mercantile Exchange rose 8.3 cents, or 5%,to settle at $1.741 per million British thermal units (mmBtu).

The U.S. Energy Information Administration (EIA) said utilities pulled a larger-than-expected 9 billion cubic feet (bcf) of gas out of storage during the week ended March 8.

That was more than the 3-bcf withdrawal analysts forecast in a Reuters poll, and compares with a withdrawal of 65 bcf during the same week a year ago and a five-year (2019-2023) average decrease of 87 bcf for this time of year.

The decline left gas stockpiles about 37% above normal levels for this time of year.

The EIA report showed "a bigger withdrawal than expected, but it is still a small withdrawal compared to historical averages", said Thomas Saal, senior vice president for energy at StoneX Financial. "It is not really a bullish number," he said.

"The weather's been very mild even for this time of year and there are some expectations for a little bit of a cold front to come through, so that might help the market," he added.

Prices fell as low as $1.511 per mmBtu on Feb. 27, their lowest since June 2020, as near-record output, mostly mild weather and low heating demand this winter allowed utilities to leave significantly more gas in storage than usual for this time of year.

Those low prices will boost U.S. gas use to a record high in 2024, but cause gas production to drop for the first year since 2020 when the COVID-19 pandemic destroyed demand for the fuel, according to the U.S. Energy Information Administration's (EIA) latest outlook.

Financial firm LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 100.3 billion cubic feet per day (bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record of 105.5 bcfd in December 2023.

Output is down as several energy firms, including EQT EQT.N and Chesapeake Energy CHK.O, delay well completions and cut back on other drilling activities.

EQT is currently the biggest U.S. gas producer, and Chesapeake will soon become the biggest producer after its merger with Southwestern Energy SWN.N.

LSEG forecast gas demand in the Lower 48 states, including exports, would rise from 109.2 bcfd this week to 111.4 bcfd next week, lower than its outlook on Wednesday.

Reporting by Daksh Grover in Bengaluru; Editing by Marguerita Choy and Jan Harvey

For gas data on LSEG's Eikon 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 Eikon 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 options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

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NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C