UPDATE 1-EIA sees lower 2009 U.S. natgas production, demand

NEW YORK, July 7 (Reuters) - The U.S. Energy Information Administration said Tuesday there will be lower domestic natural gas production and consumption in 2009, as poor economic conditions continue to pressure drilling and overall demand.

In its July Short-Term Energy Outlook, EIA forecast U.S. marketed natural gas output this year would decline 0.6 percent to 58.23 billion cubic feet per day from last year's daily rate of 58.59 bcf.

"As both consumption and prices have waned amid the recent economic downturn, natural gas producers have responded with a dramatic reduction in drilling activities," the forecast said, noting that according to Baker Hughes, total working natural gas rigs are now down 57 percent since September 2008.

Consumption is expected to decline 2.3 percent in 2009 to 62.10 bcfd, down from 63.53 bcfd in 2008. The largest decline in consumption will be in the industrial sector, which will experience an 8.2 percent decline from 18.15 bcfd to 16.66 bcfd in 2009. (Reporting by Rebekah Kebede; Editing by Marguerita Choy)