UPDATE 1-EIA sees US natgas production down 2.6 pct in 2010

* Slightly raises estimate for 2010 US natgas production

* EIA sees US gas demand rising slightly in 2010 and 2011 (Adds details about 2011 supply, demand and price outlook)

NEW YORK Feb 10 (Reuters) - The U.S. Energy Information Administration on Wednesday slightly raised its estimate for domestic natural gas production in 2010, but still expects output this year to be down 2.6 percent from 2009 levels.

In its February Short-Term Energy Outlook, EIA said it expected marketed natural gas production to be down 1.57 billion cubic feet (bcf) per day, or 2.6 percent, this year primarily due to the impact of lower drilling activity.

In 2011, EIA expects marketed gas production to climb 1.3 percent to 59.50 bcf per day as higher gas prices provide the necessary economic incentive to expand drilling programs.

EIA also forecast U.S. natural gas consumption this year would average about 62.51 bcf per day, up 0.4 percent from 2009 demand of 62.28 bcf daily, as growth in residential, commercial and industrial consumption offsets declining demand from the electric power sector.

Led by an expected increase in industrial gas use in 2011, overall gas demand next year was forecast to increase by 0.4 percent, little changed from its previous estimate.

EIA also expects Henry Hub natural gas prices this year to rise 32 percent from 2009 to about $5.36 per million British thermal units, noting high inventory levels and increased supply potential from domestic resources should keep prices from rising dramatically this year.

EIA expects Henry Hub prices to climb another 8.5 percent in 2011 to $5.86. (Reporting by Joe Silha; Editing by Lisa Shumaker)