* Front month below recent 6-month spot high * Some heat still on tap in 6- to 10-day outlooks * Recent storage data, drilling rig data supportive * Coming Up: EIA natgas storage data Thursday (Adds cash prices, updates throughout) By Eileen Houlihan NEW YORK, July 19 (Reuters) - U.S. natural gas futures edged lower in early trading Thursday as heat across the Northeast moderated, curbing demand. In addition, traders said a big 6 percent jump on Wednesday was likely leading to some profit taking. But most expect little movement in either direction before weekly inventory data is released later this morning. As of 9:35 a.m. EDT (1335 GMT), front-month August natural gas futures on the New York Mercantile Exchange were at $2.941 per mmBtu, down 3.2 cents. The nearby contract rose over $3 on Wednesday as high heat and some unexpected nuclear power plant outages led to some short covering, hovering just below the $3.06 high from early July, the highest mark for a front month since early January. Traders said prices should have a hard time remaining above the $3 level, since gas tends to lose its appeal over coal for power generation. But since posting a 10-year low of $1.902 in late April, gas futures are up 54 percent on signs that record production is finally slowing and demand picking up as more electric utilities switch from coal to gas. In the cash market, gas bound for the NYMEX delivery point Henry Hub NG-W-HH in Louisiana was heard early at $2.99 on active volume near 878 million cubic feet, up 15 cents from Wednesday's average of $2.84. Early Hub cash deals also firmed to about 5 cents over the front month contract, from deals done late Wednesday at a 3-cent premium. Gas on the Transco pipeline at the New York citygate NG-NYCZ6 was heard early near $3.14 on volume near 268 mmcf, up 6 cents from Wednesday's average of $3.08. BELOW AVERAGE BUILDS, BUT STOCKS STILL BLOATED Last week's gas storage report from the U.S. Energy Information Administration showed total domestic gas inventories rose by 33 billion cubic feet to 3.135 trillion cubic feet. The build was above Reuters poll estimates for a 26 bcf gain, but fell well short of the year-ago and five-year average gains for that week, the 11th straight week builds have fallen below seasonal norms. Traders expect the trend to continue with today's report, with most expecting data will show a build of about 34 bcf when it is released at 10:30 a.m. EDT, a Reuters poll showed. Stocks rose an adjusted 67 bcf in the same week last year and on average over the past five years have gained 74 bcf that week. The below-normal builds helped pull the surplus to last year - now at about 548 bcf, or 21 percent - down 38 percent from late-March highs. The surplus versus the five-year average is at 20 percent. (Storage graphic: link.reuters.com/mup44s) Lagging weekly builds have raised expectations that record-high storage can be trimmed to more manageable levels in the 18 weeks or so left before winter withdrawals begin. But total storage is still at record highs for this time of year and stands at about 76 percent full, a level not normally reached until the first week of September. Producing-region stocks are at 84 percent of estimated capacity. The storage surplus to last year will have to be cut by at least another 300 bcf to avoid reaching the government's 4.1 tcf estimate of total capacity. Stocks peaked last year in November at a record 3.852 tcf. Concerns remain that the overhang could still drive prices to new lows later this summer as storage caverns fill. PRODUCTION STILL HIGH While gross U.S. gas production has slowed some from January's record highs, output is still flowing at near all-time peaks despite declines in dry gas drilling and planned output cuts by several key producers. In its July short-term energy outlook released last week, the EIA raised its estimates for marketed gas production and consumption growth in 2012. The agency expects marketed natural gas production in 2012 to rise by 2.8 bcf per day, or 4.2 percent, to a record 68.98 bcfd. Consumption this year is seen climbing by 3.3 bcf daily, or 4.9 percent, to 69.91 bcf daily. Data from Baker Hughes last week showed the gas-directed rig count fell by 20 to a 13-year low of 522. It was the seventh drop in the past eight weeks. (Rig graphic: r.reuters.com/dyb62s) A 44 percent drop in dry gas drilling in the last nine months has stirred expectations that producers were getting serious about stemming the flood of record gas supplies. But horizontal rigs, the type most often used to extract oil or gas from shale, are hovering just shy of the record high 1,193 hit in May. Drillers continue to move rigs to more profitable shale oil and shale gas liquid plays that still produce plenty of associated dry gas that ends up in the market after processing. MORE FUNDAMENTALS The National Weather Service's 6- to 10-day outlook issued on Wednesday called for above-normal readings in much of the eastern half of the nation and normal or below-normal readings in the West. Total nuclear power plant outages were running at about 9,900 megawatts or 10 percent, on Thursday, up slightly from 9,200 megawatts out on Wednesday, 4,100 MW out a year ago and a five-year outage rate of 4,900 MW. The U.S. National Hurricane Center said tropical cyclone formation was not expected over the next 48 hours. The Atlantic hurricane season runs from June 1 through Nov. 30. The latest government statistics show the Gulf of Mexico accounts for 6 percent of U.S. gas production and just over 20 percent of U.S. oil production. (Reporting by Eileen Houlihan)

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