HOUSTON, April 16 (Reuters) - Natural gas prices in the

top U.S. shale field hit their lowest level in 15 months this

week and continued to trade in negative territory as a supply

overhang shows no sign of quickly abating.

Prices at the Waha hub in west Texas closed

at negative $2.99 per million British thermal units on Monday,

its lowest since December 2022, according to data from LSEG.

Waha gas has been trading negative for 23 out of the past 25

days, meaning producers are paying to have their gas taken away.

Natural gas in the Permian and across the U.S. has been

oversupplied following a warmer-than-expected winter, offtake

constraints, and operational issues at a major liquefied natural

gas plant in Texas.

Despite negative Waha gas prices, production in the Permian

is expected to rise next month alongside oil output, the U.S.

Energy Information Administration (EIA) said this week in a

monthly report.

Permian gas output is forecast to rise by 140 million cubic

feet per day (mcfd) to 25.2 billion cubic feet per day (bcfd),

while U.S. gas output is expected to fall by 258 mcfd to 99.9

bcfd, the EIA said.

In the Permian, much of the gas is produced alongside oil,

which is trading near $85 a barrel - a level strong enough for

producers to pay to have gas taken away.

Waha negative pricing could hold through the second quarter,

researchers at investment firm Tudor, Pickering, Holt & Co said

in a note on Monday, with some relief expected later in the year

when the Matterhorn Express pipeline, a joint venture between

infrastructure company WhiteWater, EnLink Midstream ( ENLC ), Devon

Energy ( DVN ), and MPLX ( MPLX ), starts service.

That 580-mile system will move 2.5 billion cubic feet per

day of natural gas from the Permian Basin to the Houston, Texas,

area.

"I would expect [Waha prices] to improve towards the end of

April, early May, but we are going to see continued low Waha

prices until Matterhorn comes online", said Robert Wilson, vice

president of analytics at East Daley Analytics.

Near-term prices will remain pressured by pipeline

maintenance and outages at the Freeport LNG terminal in Texas.

Kinder Morgan's ( KMI ) El Paso and Gulf Coast Express

pipelines are both undergoing maintenance and its Permian

Highway Pipeline expects a reduction in capacity next month.

Freeport, meanwhile, remained mostly offline for a fifth

straight day on Monday, with gas utilization rates at 125

million cubic feet per day (mmcf/d), or 5% of its fully

operational use, data from financial firm LSEG showed on Monday.

The company in late March said it expects Trains 1 and 2 to

remain shut until May for inspections and repairs, while Train 3

was operating.

Those outages helped put pressure on the benchmark for

natural gas in the U.S., with Henry Hub trading at around

$1.68 per mmBtu during intraday trading on Tuesday, compared

with $2.28 this time last year.