* Front month remains above last week's 10-year spot low * Mild weather on tap for most of nation * US crude futures rise in early trade * Coming Up: API oil data Tuesday, EIA oil data Wednesday NEW YORK, March 19 (Reuters) - U.S. natural gas futures were about 3 cents lower early Monday, but remained above last week's 10-year spot chart low, as mild weather across most of the nation and bloated inventories still weighed on sentiment. Front-month April natural gas futures on the New York Mercantile Exchange were at $2.294 per million British thermal units in early activity, down 3.2 cents. Last week the April contract slid to $2.204, the lowest price for a front month in just over 10 years. STORAGE OVERHANG A PROBLEM FOR PRICES Last week's storage report from the U.S. Energy Information Administration showed total domestic gas inventories fell to 2.369 trillion cubic feet but remain 45 percent above year-ago levels and nearly 52 percent above the five-year average level. (Storage graphic: link.reuters.com/mup44s) With extreme mild weather across much of the nation last week, most traders expect this week's EIA report to show an early injection into storage. Early estimates for this week's EIA report range from a build of 7 bcf to 16 bcf versus the year-ago adjusted decline of 20 bcf and a five-year average drop for that week of 17 bcf. Without some late-season cold or early heat, stocks are on track to end winter at an all-time high of 2.2 tcf, well above the previous record of 2.148 tcf set in 1983. The cushion could spell more trouble for prices late in the summer stock-building season if storage caverns fill to capacity and force more supply into the market. OUTAGES, CUTS COULD HELP TIGHTEN MARKET Nuclear plant outages were running at about 21,700 megawatts, or 22 percent, on Monday, up from 16,800 MW out a year ago and a five-year outage rate of about 16,500 MW. Traders said the outages could add more than 1 bcf to daily gas demand. And planned output cuts by producers could trim 1 bcf per day or more from flowing supply. Relatively cheap gas has also drawn more industrial use and prompted additional utility fuel switching away from more expensive coal. MORE FUNDAMENTALS The National Weather Service six- to 10-day outlook issued on Sunday again called for above or much-above-normal readings for more than the eastern two-thirds of the nation and below-normal readings only on the West Coast. Baker Hughes drilling data last week showed the gas-directed rig count fell for a 10th straight week to a 10-year low of 663. The steady drop in gas-directed drilling has stirred talk that low prices might finally slow output. (Rig graphic: r.reuters.com/dyb62s) Analysts agree it can take months for a slowdown in drilling to translate into lower production, noting the producer shift in spending to higher-value oil and gas liquids still produces plenty of associated gas that partly offsets reductions in dry gas output. A recent Bernstein report said the gas-directed rig count would have to drop to about 600 before it would be comfortable forecasting flat to falling production, but some traders think that number is still too high.

Source