Adds latest prices

By Scott DiSavino

Feb 15 (Reuters) -U.S. natural gas futures slid about 2% to a fresh 3-1/2-year low onThursday on rising, near-record output and a smaller-than-expected storage withdrawal last week when warm weather kept heating demand low.

That price decline occurred despiteforecasts for more demand over the nexttwo weeks than previously expected, and as some producers said they would reduce drilling in 2024 due to the recent price plunge.

TheU.S. Energy Information Administration (EIA) saidutilities pulled a smaller-than-expected 49 billion cubic feet (bcf) of gas out of storage during the week ended Feb. 9.

That was lowerthan the 68-bcf withdrawal analysts forecast in a Reuters poll and compared with a decrease of 117 bcf in the same week last year and a five-year (2019-2023) average decline of 119 bcf for this time of year. EIA/GAS NGAS/POLL

The combination of near-record production, mostly warmer-than-usual weather and low heating demand so far this winter, other than the Arctic freeze in mid-January, has allowed utilities to leave more gas in storage than usual. Stockpiles were about 16% above normal levels for this time of year.

U.S. energy firm Antero Resources AR.N, a big gas producer, said it expects gas production to decline by about 3% in 2024 versus 2023. Antero also said it expects to cut its drilling and completion capital budget by 26% after reducing the number of rigs in operation to two from three, and cutting one of two completion crews.

Comstock Resources CRK.N, another big U.S. gas producer, made a similar announcement about reducing gas rigs earlier this week.

But even if some energy firms reduce gas drilling, gas output could still increasebecause oil prices CLc1 are high enough to encourage producers to seek more oil in shale basins like the Permian in Texas and New Mexico and the Bakken in North Dakota. A lot of associated gas also comes out of the ground with oil in those shale basins.

After falling about 24% over the last eightdays, front-month gas futures NGc1 for March delivery on the New York Mercantile Exchange fell 2.8 cents, or 1.7%, to settle at $1.581 per million British thermal units, theirlowest close since June 2020 during theheight of COVID-19 demand destruction.

That kept thecontract in technically oversold territory for an eighth day in a row for the first time since February 2018.

SUPPLY AND DEMAND

Financial company LSEG said gas output in the U.S. Lower 48 states has risen to an average of 105.8 billion cubic feet per day (bcfd) so far in February, up from 102.1 bcfd in January, but shy of the monthly record high of 106.3 bcfd in December.

Meteorologists projected the weather across the Lower 48 states would remain mostly warmer than normal through March 1, with next week expected to be slightly cooler than this week.

With slightly cooler weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 125.1 bcfd this week to 127.7 bcfd next week. Those forecasts were higher than LSEG's outlook on Wednesday.

Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants have fallen to an average of 13.6 bcfd so far in February, down from 13.9 bcfd in January and a monthly record of 14.7 bcfd in December.

Analysts do not expect U.S. LNG feedgas to return to record levels until Freeport LNG is back at full power, which could occur in late February.

Reporting by Scott DiSavino; editing by Jonathan Oatis, Barbara Lewis and Paul Simao

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

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