(Repeats with no changes. John Kemp is a Reuters market analyst. The views expressed are his own)

* Chartbook: https://tmsnrt.rs/32UHfmQ

By John Kemp

LONDON, Oct 29 (Reuters) - U.S. natural gas stocks have surged during the injection season and are now above the five-year seasonal average for the first time in two years, despite a slump in prices and a sharp drop in the number of rigs drilling for gas.

Working stocks in underground storage have risen by 2,465 billion cubic feet (bcf) since the start of April, the largest seasonal gain since 2014, according to data from the U.S. Energy Information Administration (EIA).

Stocks have moved above the five-year average this month for the first time since September 2017 and are now 519 bcf (17%) above the same point last year ("Weekly natural gas storage report", EIA, Oct. 24).

In response, prices have slumped in a bid to encourage power producers to buy as much gas as possible and run their gas-fired generation units for more hours at the expense of coal-fired power stations.

Futures prices for gas delivered to Henry Hub during calendar year 2020 have fallen to less than $2.50 per million British thermal units, down from almost $2.70 at the same point last year and nearly $2.90 two years ago.

SATURATED DEMAND

Domestic gas production has soared faster than either consumption by domestic power producers or the ability of the export market to absorb it (https://tmsnrt.rs/32UHfmQ).

Gas production rose by 10.5% in the three months between May and July compared with the same period a year earlier, only a modest slowdown from a record growth rate of 13.7% in August-October 2018.

By contrast, gas consumption by power producers was up by just 1.1% in the three months between May and July from a year earlier, an abrupt deceleration from growth of 18.5% in August-October 2018.

Net gas exports continued to accelerate and were up by 342 billion cubic feet between May and July compared with a year earlier.

But even the massive rise in exports was not sufficient to prevent a near-record increase in gas stocks during the injection season.

PRODUCTION SLOWDOWN

The broad-based slowdown in manufacturing as a result of the trade war with China curbed both gas and power consumption growth compared with 2018 and 2017.

Cooler temperatures this summer also helped reduce air-conditioning load and demand for gas from electricity generators compared with 2018.

But gas stocks have been rising faster for any given level of cooling demand for two years now, highlighting the underlying change in gas market dynamics.