--Natural gas futures rise amid signs of power generation demand --Prices up more than 20% since recent bottom --Weather outlook suggests more demand ahead -analyst By Dan Strumpf Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Natural gas futures rebounded Monday, as signs of fresh demand from power generators and other users continued to support prices following their steep fall. Natural gas for June delivery recently rose 7.6 cents, or 3.3%, to $2.355 a million British thermal units on the New York Mercantile Exchange. Futures traded higher, following Friday's sell-off, as prices continue to find support from signs that power utilities are scaling back their use of coal in favor of cheap natural gas. Early indications suggest that gas-fired electricity demand was as much as a third larger from a year earlier in April, said Jim Ritterbusch of Ritterbusch & Associates. "We're continuing to see signs that the market's focus is turning to increased coal-to-gas switching," said Gene McGillian, analyst at Tradition Energy in Stamford, Conn. "The oversupply we've had seems to have been priced into the market for the time being." Front-month futures have been bobbing around the low $2/MMBtu level over the last week following a sharp rally off more-than-10-year lows. Prices have risen 23% since hitting their recent bottom of $1.907/MMBtu, their lowest price since 2001. A variety of factors have helped power the market's recent rally, including cooler temperatures, a round of natural gas production cuts and signs that the steep fall in gas prices had spurred fresh demand from power generators. Last week, data from the Energy Information Administration showed that natural gas inventories the previous week rose less than expected, the latest sign that demand is increasing. Still, the inventory overhang remains massive after the recent mild winter, which squelched demand for natural-gas-fired heating. About half of all U.S. homes use natural gas for heating. Production from shale gas fields, meanwhile, hit all-time records during the winter months. Inventories currently stand at 2.576 trillion cubic feet, about 50% above their average level for this time of year. Looking ahead, the recent bout of cold weather in much of the Northeast could continue to support prices, said Matt Smith, analyst at Summit Energy in Louisville, Ky. "Weather outlooks are pointing to increased cooling demand as the [eight-to-14-day forecast] shows above normal conditions across much of the U.S., spurring on a rally," he said. -By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com.

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