UPDATE 2-EIA again cuts 2009 US gas supply growth estimates

(Adds Henry Hub gas price estimates)

NEW YORK, Jan 13 (Reuters) - The U.S. Energy Information Administration on Tuesday again cut its estimate of domestic natural gas production growth in 2009 and further increased the expected decline in demand as economic activity continues to slow.

In its January short-term energy outlook, EIA forecast U.S. marketed natural gas output this year would rise 0.41 billion cubic feet per day to 58.88 bcf daily, up 0.7 percent from last year but down slightly from a 0.9 percent gain forecast in its previous monthly report.

EIA also projected domestic gas consumption this year would fall 0.64 bcf per day, or 1 percent, to 62.94 bcf per day, up from the 0.3 percent drop forecast last month.

EIA said the poor outlook for gas demand this year was largely driven by expectations for continued economic weakness.

While slight consumption growth was expected in the residential sector this year, declines in commercial, industrial and electric use should more than offset any residential gains, EIA said.

Demand from the industrial sector alone was projected to fall 3 percent in 2009.

EIA expects consumption next year to grow slightly by 0.7 percent, primarily due to gains from the electric power sector.

In 2010, EIA said, total U.S. marketed natural gas production was expected to decline 0.9 percent, as producers continue to slow development due to lower gas prices.