Adds latest prices

By Scott DiSavino

April 12 (Reuters) -U.S. natural gas futures held near a two-week lowon Friday on worries about a hugestorage surplus andforecasts for lower demand over the next two weeks than previously expected due primarily toa drop in feedgas to the Freeport LNG export plant in Texas.

Analysts forecast gas stockpiles were about 36% above normal levels for this time of year. EIA/GAS NGAS/POLL

That lack of price movementoccurred despite a drop in output as producers reduceddrilling activities after prices fell to a 3-1/2-year low in February and March, and forecasts for colder weather to boost heating demand in two weeks.

U.S. drillers cut the number of gas rigs operating this week by one to 109, their lowest since January 2022, according to data from energy services companyBaker Hughes BKR.O.

Front-month gas futures NGc1 for May delivery on the New York Mercantile Exchange rose 0.6 cents, or 0.3%, to settle at $1.770 per million British thermal units. OnThursday the contract closed atits lowest since March 28.

For the week, the front-month lostabout 1% in itsfirst weekly decline in four weeks.

In the spot market, next-day gas prices at the Waha hub NG-WAH-WTX-SNL in the Permian Basin in West Texas rose to negative $1.74 per mmBtu on April 11 from a near four-year low of negative $2.10 on April 10, according to data from SNL Energy on the LSEG terminal.

In Canada, spot gas prices at the AECO hub NG-ASH-ALB-SNL in Alberta fell to $1.00 per mmBtu, their lowest level since October 2022 for a fourth day in a row.

In other news, Williams Cos WMB.N said it will allow the certificate for the proposed Northeast Supply Enhancement (NESE) gas pipe in Pennsylvania, New Jersey and New York to expire in May, according to a filing with federal energy regulators.

The U.S. Federal Energy Regulatory Commission approved construction of the roughly $1 billion NESE project in 2019, but Williams put it on hold because environmental regulators in New York and New Jersey did not approve water permits.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states fellto an average of 98.8 billion cubic feet per day (bcfd) so far in April, down from 100.8 bcfd in March. That compares with a monthly record of 105.6 bcfd in December 2023.

LSEG forecast gas demand in the Lower 48, including exports, would fall from 99.3 bcfd this week to 94.4 bcfd next week as the weather warms before rising to 98.1 bcfd in two weeks with cooler temperatures.

The forecasts for this week and the next were lower than LSEG's outlook on Thursday.

Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants slid to an average of 12.5 bcfd so far in April, down from 13.1 bcfd in March. That compares with a monthly record of 14.7 bcfd in December.

On a daily basis, LNG feedgas was on track to fall to a one-week low of 12.0 bcfd as the amount of gas flowing to Freeport LNG holds at 0.1 bcfd for a second day in a row on Friday, down from a recent high of 1.1 bcfd on Tuesday and an average of 0.8 bcfd over the prior seven days.

Freeport said in late March it expects Trains 1 and 2 to remain shut until May for inspections and repairs, while Train 3 was operating.

But the small increase in feedgas seen on Tuesday convinced some in the marketthat Train 1 or 2 was returning to service early. That, however, was before Train 3 tripped late on Tuesday.

Reporting by Scott DiSavino; Editing by Paul Simao and Leslie Adler

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