* Front month above last weeks' 10-year spot low * Milder spring weather on tap for much of the nation * U.S. crude futures rise $2 a barrel early * Coming Up: API oil data Tuesday, EIA oil data Wednesday (Adds cash prices, updates throughout) By Eileen Houlihan NEW YORK, April 17 (Reuters) - U.S. natural gas futures slid about 4 cents, or nearly 2 percent, early Tuesday, hovering near $2 per million British thermal units but remaining above last week's 10-year spot chart low. Traders said milder spring weather and ongoing concerns over record-high supplies would continue to weigh on prices, but some said the market was oversold and due for bounce after losing 5 percent last week in four of five sessions. Front-month May natural gas futures on the New York Mercantile Exchange were at $1.98 per mmBtu in early trade, down 3.6 cents, or almost 2 percent, after sliding Friday to $1.959, the lowest price for a front month since January 2002. Monday was the first day in six sessions the front month failed to make a new low. In the cash market, gas bound for the NYMEX delivery point Henry Hub NG-W-HH in Louisiana was heard early at $1.89, up 1 cent from Monday's average of $1.88. Early Hub cash deals were also done at about a 10-cent discount to the front month, little changed from deals done late Monday at a 9-cent discount. Gas on the Transco pipeline at the New York City gate NG-NYCZ6, however, was heard early near $2.07, down 2 cents from Monday's $2.09 average. RECORD INVENTORIES U.S. Energy Information Administration data last week showed total gas inventories rose to 2.487 trillion cubic feet, remaining at record highs for this time of year and standing nearly 56 percent above last year and about 59 percent above the five-year average level. (Storage graphic: link.reuters.com/mup44s ) Early injection estimates for this week's EIA report range from 19 bcf to 41 bcf versus last year's adjusted build of 42 bcf and the five-year average increase for that week of 26 bcf. If weekly stock builds through October match the five-year average pace, inventories would top out at 4.595 tcf, or about 12 percent above peak estimated capacity of about 4.1 tcf. That could sink prices later in the injection season if storage caverns fill up and force more gas into a well-supplied market. PRODUCTION ALSO STILL AT RECORD HIGHS The EIA's short-term energy outlook last week also offered little hope for bulls, with the agency sharply raising its estimate for marketed gas production this year for a third straight month. EIA said it expects 2012 gas output to climb by 3 bcf per day, or 4.5 percent, to a record 69.22 bcfd, up from its March outlook that had output this year at 67.91 bcf daily. EIA also forecast a significant 2.8 bcf per day, or 4.3 percent, gain in consumption this year, primarily due to more utilities switching from pricier coal to cheaper gas, but it was not expected to be enough to tighten an over supplied gas market. Production growth is expected to slow this year as low prices hit plans for new drilling, but the sharp decline in the Baker Hughes gas rig count -- down a third since peaking at 936 in October -- has not yet reduced output partly due to increased drilling efficiency. The gas-directed rig count has fallen in 13 of the last 14 weeks, sinking on Friday to its lowest level in 10 years, but rising output from shale has kept production on an upward track. (Rig graphic: r.reuters.com/dyb62s ) MORE FUNDAMENTALS The National Weather Service's 6- to 10-day outlook issued on Monday called for above-normal readings for much of the mid-Continent and below-normal readings mostly in the eastern third of the nation. Spring nuclear power plant outages were running at about 27,000 megawatts, or 27 percent, on Tuesday, up from about 26,100 MW out a year ago and a five-year outage rate of about 23,700 MW. Traders said the outages should add more than 1 bcf to daily gas demand. (Reporting by Eileen Houlihan; Editing by John Picinich)

Source