* Cool Northeast, Midwest forecasts underpin front futures
* Front month hits highest mark since early December 2011
* Concerns grow that gas becoming less competitive with coal
* Coming up: Reuters weekly natural gas storage poll Wednesday
(New throughout, adds analyst quote, updates prices, changes byline)
By Joe Silha
NEW YORK, Oct 2 (Reuters) - U.S. natural gas futures mostly lost ground on Tuesday, pressured by profit-taking after five straight days of gains, but cool forecasts for the Northeast and Midwest underpinned the front contract which overnight hit a new high for the year.
Despite prospects for early heating load, particularly in the Midwest, many traders and analysts remained skeptical of the upside.
For one, supplies are brimming with storage and production still running at or near record highs.
Competition from low-priced coal could also curb buying enthusiasm. As gas prices push well above $3 per million British thermal units, gas could become less competitive with coal and some utilities that have been burning cheaper gas to generate power could switch back to coal.
Loss of that demand, which helped prop up gas prices all summer, could force more gas into a well-supplied market.
Producers, too, could be drawn in if prices move much higher, opting to hook up wells that have been drilled but not flowing because gas prices below $3 were not very attractive.
"We're seeing a little profit taking and producer selling after recent gains, but we're also seeing some consumer buying at the lows. I think the market may consolidate here and trade sideways for a while," a Pennsylvania-based cash trader said.
At 12:50 p.m. EDT (1650 GMT), front-month gas futures
on the New York Mercantile Exchange were up 0.5 cent at $3.485 per mmBtu after climbing overnight to a new 2012 high of $3.546. Other contracts were down slightly.
The front month had gained nearly 23 percent in the previous five sessions, its biggest five-day run in about three years, but much of the increase occurred last Wednesday, when November took over front position with a 20-cent premium to the expiring October contract.
Chart traders said the front month was overbought and due for a pullback, noting the 14-day relative strength index on Monday climbed above 83 percent, its highest in 17 months. It was still in very overbought territory above 80 on Tuesday.
After a fairly mild week this week, private forecaster MDA EarthSat expects temperatures next week to cool to normal or below normal for the eastern two thirds of the nation, with the coolest anomalies focused in the Central U.S.
STORAGE BUILDS PICK UP, STOCKS STILL AT RECORD
Energy Information Administration data last week showed that total gas inventories for the week ended Sept. 21 rose by 80 billion cubic feet to 3.576 trillion cubic feet, a record high for this time of year. It was the biggest weekly injection so far in 2012.
(Storage graphic: )
While record heat this summer trimmed a huge storage surplus relative to last year by 67 percent from its late-March high, storage builds in autumn are likely to pick up if weather-related demand remains moderate.
At 84 percent full, total stocks are hovering at a level not normally reached until the third week of October and still offer a huge cushion that can help offset any weather-related spikes in demand or supply disruptions from storms.
Injection estimates for Thursday's EIA report range from 55 bcf to 75 bcf, with most in the high-60s. Stocks rose an adjusted 101 bcf during the same week last year, while the five-year average increase for that week is 78 bcf.
Gas inventories are still likely to end the stock-building season above last year's all-time high of 3.852 tcf.
RIGS DECLINE, PRODUCTION STILL HIGH
Drilling for natural gas has been in a near steady decline for almost a year, with the gas-directed rig count down some 54 percent since last October and posting a new 13-year low just last week.
But so far, production shows few, if any, signs 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 stubbornly high.
EIA gross natural gas production data on Friday showed that July output climbed 0.4 percent from June to 72.58 bcf per day, just below January's record high of 72.74 bcfd.
(Reporting By Joe Silha; Editing by Marguerita Choy)
Keywords: MARKETS NYMEX/NATGAS