--All eyes on 10:30 a.m. EDT, EIA gas storage report --Inventory rise expected to be below typical levels --NOAA sees above-normal summer temperatures across southern U.S. (Updates to add cash prices, NOAA forecast commentary) By David Bird Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Natural gas futures prices dropped early Thursday as traders took profits after prices settled at seven-week highs Wednesday. Prices will take their next cue from the U.S. weekly inventory report due out at 10:30 a.m. EDT. The Energy Information Administration data is expected to show gas storage rose last week by 53 billion cubic feet, according to a survey of analysts by Dow Jones Newswires. That's far less than the 86 bcf rise posted in this week last year and well below the five-year average of 91 bcf. A rise of that size would leave inventories at the record highs for this time of year, but would continue the recent pattern of shrinkage of inventory against historical levels. If the forecast is correct, inventories would stand at 40% above the year-ago and five-year average levels, compared with a surplus of more than 44% last week. "We're in a wait-and-see mode," said Matt Smith, analyst at Summit Energy. "There's a bit of trepidation after the gains on pre-positioning ahead of the numbers." Prices have jumped 7.7% or 18.7 cents per million British thermal units in the past two days in anticipation of the report. Prices jumped 11.8 cents Wednesday--the biggest single-day rise since Feb. 16--to settle at $2.618/mmBtu, the highest level since Feb. 23. Natural gas for June delivery on the New York Mercantile Exchange was 4.1 cents lower, at $2.577/mmBtu. Front-month prices have climbed from 10-year lows in late April of $1.90/mmBtu on rising demand from electric utilities who are switching away from coal to cheaper gas. Above-normal temperatures are expected to stretch across the southern half of the U.S. in June through August, U.S. government forecasters said Thursday. There isn't a clear temperatures pattern in the core summer months in the northern U.S, with the National Oceanic and Atmospheric Administration showing equal chances of normal, above-normal, or below-temperatures for the region. Summit's Smith said the NOAA forecast would be bullish for prices, if it materializes, but said traders usually don't look beyond short-term forecasts. "It would be very positive for power demand, but we'll have to see how it looks as we get closer" to the peak summer-demand season, he said. Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.53/mmBtu, according to IntercontinentalExchange, compared with Wednesday's average of $2.50/mmBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $2.63/mmBtu, down from $2.4625/mmBtu. -By David Bird, Dow Jones Newswires; 212-416-2141; david.bird@dowjones.com

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