UPDATE 3-US natgas futures end up, cold drives front to 19-mth high

* Nuclear outages still running above normal

* Chilly weather to continue into early April

* Coming up: EIA natgas storage data, Baker Hughes rig data Thursday

(Releads, adds analyst quote, updates futures prices)

By Joe Silha

NEW YORK, March 27 (Reuters) - U.S. natural gas futures ended higher on Wednesday for a second straight day, with bullish inventory expectations and chilly weather forecasts for at least the next week driving the new front contract to its highest in about 19 months.

Cold late-season weather has triggered strong demand for heating which put a huge dent in inventories, while above-average nuclear plant outages have increased gas used for power generation and also helped tighten the market.

"Overall, current fundamentals remain supportive for natural gas prices as heating-related demand is likely to continue for at least another week, maybe two," Energy Management Institute's Dominick Chirichella said in a report, also adding that Thursday's weekly inventory report was expected to be bullish.

Front-month gas futures

on the New York Mercantile Exchange ended up 7.7 cents, or 1.9 percent, at $4.068 per million British thermal units after climbing late to $4.103, the highest since early September 2011.

Despite the recent run, some traders said the market may be vulnerable to a sharp, technical sell-off, noting front-month futures prices have rallied near 30 percent since mid-February.

The strong move up has been accompanied by decent volume and a 215,000-lot gain in open interest, bullish signs that indicate new buying has fueled much of the upside but could eventually lead to a sharp move lower when longs decide to cash out.

Futures-only OI hit a record high for the eighth straight session on Tuesday, climbing to 1,407,669 contracts.

Traders said some players may be buying ahead of the three-day weekend, noting NYMEX floor and electronic trading will be closed Friday for the Good Friday holiday.

But with production still flowing at or near a record peak and milder spring weather likely to soon slow demand, many traders remain skeptical of further upside.

They note that gas prices above $4 should curb demand by prompting some utilities to use more coal to generate power and increase supply by encouraging producers to turn on more wells.

Commodity Weather Group said the six-to-10-day outlook turned colder overnight for the Midwest, East and South and still expects seasonal to cool temperatures for the eastern half of the nation in the 11-to-15-day time frame.

STRONG STORAGE DRAW EXPECTED

U.S. Energy Information Administration data last week showed total gas inventories for the week ended March 15 had dropped to 1.876 trillion cubic feet but were still 162 billion cubic feet, or 9 percent, above the five-year average.

(Storage graphic: )

Traders and analysts expect that surplus to shrink sharply in Thursday's inventory report, with most looking for an 87 bcf withdrawal, according to a Reuters poll.

Inventories rose an adjusted 45 bcf in the same week last year, while storage normally gains 6 bcf for that week.

Stocks will likely end the heating season near the 1.73-tcf average for March 31, or about 30 percent below last winter's record high finish of 2.48 tcf. A Reuters poll in mid-January put the consensus end-winter inventory forecast at about 2 tcf.

Total gas pulled from storage so far this winter is about 2.050 tcf, roughly 580 bcf, or 39 percent, more than the same time last year and nearly 5 percent above normal.

RIGS CLIMB, OUTPUT NOT SLOWING MUCH

Traders were waiting for the next Baker Hughes

drilling rig report, expected a day early this week on Thursday due to the Friday holiday. The gas-directed drilling rig count has fallen in three of the last four weeks and is hovering just above the 14-year low of 407 posted two weeks ago.

(Rig graphic: )

Despite the rig decline over the last year, production has not slowed much, if at all, from the record high hit last year.

(Additional reporting by Eileen Houlihan; Editing by John Wallace and Chris Reese)

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Keywords: MARKETS NYMEX/NATGAS