* Front month well below recent 7-1/2-month high * Milder weather on tap for consuming regions * Stir in tropical activity has some traders cautious * Coming Up: EIA natgas storage data Thursday By Eileen Houlihan NEW YORK, Aug 16 (Reuters) - U.S. natural gas futures rose about 1 percent in early trading Thursday ahead of weekly government data expected to show another below-normal injection into storage. Most traders and analysts expect weekly data from the U.S. Energy Information Administration to show a build of about 24 billion cubic feet when it is released today at about 10:30 a.m. EDT, a Reuters poll showed. Stocks rose an adjusted 43 bcf in the same week last year, and on average over the past five years have gained 43 bcf that week. A recent stir in tropical activity also had some traders cautious, but mild weather on tap for consuming regions of the nation was expected to dull any late-season cooling demand. Most said prices will have a hard time breaking back above $3 per million British thermal units, the level where gas tends to lose much of its appeal over coal for power generation. As of 9:12 a.m. EDT (1306 GMT), front-month September natural gas futures on the New York Mercantile Exchange were at $2.767 per mmBtu, up 1.9 cents, or less than 1 percent. The nearby contract rose as high as $3.277 in late July, its highest mark since December. The National Weather Service's six- to 10-day outlook issued on Wednesday again called for below-normal temperatures across much of the eastern half of the nation through the mid-continent and on the West Coast, and above-normal readings for the remainder of the West and along the north East Coast. The National Hurricane Center said Tropical Storm Gorden had formed over the central Atlantic, while the remnants of Tropical Depression Seven over southeastern Mexico had a 10 percent chance to regenerate in the next 48 hours. ANOTHER BELOW-AVERAGE STOCK BUILD Last week's EIA gas storage report showed domestic gas inventories rose 24 bcf to 3.241 trillion cubic feet. The build was below the year-ago and five-year average increase for a 15th straight week, but storage remains at record highs for this time of year. At 79 percent full, storage stands at a level not normally reached until mid-September. Producing-region stocks are at 83 percent of estimated capacity. (Storage graphic: link.reuters.com/mup44s) Concerns remain that the storage overhang could drive prices to new lows later this summer if inventories climb to levels that would test the government's 4.1-tcf estimate of capacity. HIGH PRODUCTION Baker Hughes drilling rig data on Friday showed the gas-directed rig count fell for the 11th time in 12 weeks to a 13-year low of 495. (Rig graphic: r.reuters.com/dyb62s) Dry gas drilling has become largely uneconomical at current prices, and a 47 percent drop in the gas rig count over the last nine months has fed expectations that producers were getting serious about slowing record output. But drillers have moved rigs to more-profitable shale oil and shale gas liquid plays that still produce plenty of associated gas that ends up in the market after processing. Traders have been looking for signs that relatively low gas prices might finally slow record output, but production is still at 3 bcfd, or 4.3 percent, above the same year-ago month. The EIA, in its latest short-term energy outlook, trimmed its estimate for domestic gas production growth in 2012, but still expects output this year to be up 3.8 percent from 2011's record levels. (Reporting by Eileen Houlihan)

Source