U.S. natgas futures edge lower as weather moderates

* Front month well below last week's 2012 high

* Nuclear power plant outages still strong

* Milder weather on tap for most of the country

* Coming up: API oil data Wednesday, EIA oil, gas data Thursday

By Eileen Houlihan

NEW YORK, Oct 9 (Reuters) - U.S. natural gas futures edged lower early on Tuesday, as weather forecasts continued to moderate after a chilly weekend in consuming regions.

The National Weather Service six- to 10-day outlook issued on Monday called for above-normal temperatures for nearly the entire nation, limiting heating demand.

But nuclear power plant outages totaled about 20,000 megawatts, or 20 percent of U.S. capacity, a factor that could help limit more losses.

Still, many traders remain concerned that gas priced at well above $3 per million British thermal units will continue to lose market share to coal for power generation.

As of 9:07 a.m. (1307 GMT), front-month November natural gas futures on the New York Mercantile Exchange

were at $3.382 per mmBtu, down 2.1 cents, or less than 1 percent. The contract rose as high as $3.546 one week ago, its highest mark since December.


Last week's gas storage report from the U.S. Energy Information Administration showed domestic gas inventories rose the previous week by 77 billion cubic feet to 3.653 trillion cubic feet.

Storage stands 8 percent above the same week in 2011 and 8 percent above the five-year average level.

(Storage graphic: )

Inventories are still at record highs for this time of year and likely to end the stock-building season above last year's all-time high of 3.852 tcf.

At 86 percent full, storage is hovering at a level not normally reached until the last week of October, offering a huge cushion that can help offset any weather-related spikes in demand or supply disruptions from storms.

Early injection estimates for this week's EIA report range from 76 bcf to 98 bcf versus a year-earlier build of 108 bcf and the five-year average increase for the week of 84 bcf.


Baker Hughes data on Friday showed the gas-directed rig count rose by two to 437 after sliding to another 13-year low two weeks ago.

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 Kenneth Barry)

((eileen.houlihan@thomsonreuters.com, Twitter @eileenreuters)(+1 646 223-6074)(Reuters Messaging: eileen.houlihan.reuters.com@reuters.net))