* Front month slips from overnight 2012 high
* Nuclear power plant outages still strong
* Mostly milder weather on tap for the nation
* Coming up: Baker Hughes gas drilling rig data Friday
By Eileen Houlihan
NEW YORK, Oct 12 (Reuters) - U.S. natural gas futures edged lower early on Friday, which traders blamed on some profit taking after the front month rose to a fresh 2012 high in electronic trade.
A smaller-than-expected weekly inventory build and some near-term cool weather in consuming regions boosted the contract on Thursday. The front month had gained 6 percent so far this week before Friday's dip.
But milder weather on tap for later in the month and for at least the start of winter was seen limiting further gains.
In addition, many traders remain concerned that gas priced well above $3 per million British thermal units will continue to lose market share to coal for power generation.
As of 9:22 a.m. (1322 GMT), front-month November natural gas futures on the New York Mercantile Exchange
were at $3.577 per mmBtu, down 2.7 cents, or about 1 percent. The contract rose as high as $3.638 in electronic trade, its highest since early December.
The National Weather Service six- to 10-day outlook issued on Thursday called for above-normal temperatures in the Northeast and Southwest and mostly normal readings elsewhere across the nation.
On the nuclear front, outages totaled about 20,100 megawatts, or 20 percent of U.S. capacity, up from 19,200 MW on Thursday and a five-year outage rate of about 20,000 MW, but just under last year's 20,200 MW out on the same day.
LIGHT STORAGE BUILD, INVENTORIES STILL HIGH
Thursday's gas storage report from the U.S. Energy Information Administration showed domestic gas inventories rose last week by 72 billion cubic feet to 3.725 trillion.
Traders viewed the build as bullish, noting it was below Reuters poll estimates for an 80 bcf gain, the year-ago injection of 108 bcf and the five-year average increase for that week of 84 bcf.
But storage still stands nearly 7 percent above last year's levels and nearly 8 percent above the five-year average level.
(Storage graphic: )
Inventories are still at record highs for this time of year and are likely to end the stock-building season above last year's all-time high of 3.852 tcf.
Storage, now at 88 percent full, is at a level that exceeds the average peak for the year of about 3.7 tcf typically hit in early November. Without some unseasonably cold weather this month, stocks are likely to grow for four or five more weeks.
Early injection estimates for next week's EIA report range from 30 bcf to 60 bcf versus a year-earlier build of 106 bcf and the five-year average increase for the week of 71 bcf.
HIGH PRODUCTION
Traders awaited the next Baker Hughes gas drilling report expected later Friday. Data last week showed the gas-directed rig count rose by two to 437 after sliding to another 13-year low the prior week.
It was the second gain in three weeks, but only the eighth time this year that the gas rig count has risen. The count is still down 53 percent since peaking at 936 last October.
Drilling for natural gas has been in a near-steady decline for the last year, but so far production has shown no significant sign of slowing.
(Rig graphic: )
While dry gas drilling has become largely uneconomical at current prices, gas produced from more profitable shale oil and shale gas liquids wells has kept output near record highs.
(Editing by Bob Burgdorfer)
((eileen.houlihan@thomsonreuters.com, Twitter @eileenreuters)(+1 646 223-6074)(Reuters Messaging: eileen.houlihan.reuters.com@reuters.net))
Keywords: MARKETS NYMEX/NATGAS