* Front month still well below recent 7-1/2-month high * Warm weather also on tap for consuming regions * Storm Isaac nearly a hurricane, heads for U.S. Gulf coast * Coming Up: API oil data Tuesday, EIA oil data Wednesday (Recasts, adds cash prices, hurricane graphic, updates futures prices) By Eileen Houlihan NEW YORK, Aug 28 (Reuters) - U.S. natural gas futures seesawed on either side of unchanged early Tuesday, edging briefly higher amid warm weather in consuming regions of the nation and shut-in production from Tropical Storm Isaac. But most traders expect Gulf of Mexico shut in production from Isaac to be temporary, with the storm only expected to strengthen into a low-level hurricane. The storm was expected to move ashore late Tuesday or early Wednesday near southeastern Louisiana. It had already caused the shut-in of almost half of Gulf Coast natural gas production. (Reuters Hurricane Tracker - here) Strong nuclear power plant outages were also adding support. But most traders expect prices to have a hard time breaking back above $3 per million British thermal units, the level where gas loses much of its appeal over coal for power generation. As of 9:30 a.m. EDT (1330 GMT), front-month September natural gas futures on the New York Mercantile Exchange were at $2.665 per mmBtu, up 1.2 cents. The nearby contract peaked at $3.277 in late July, its highest mark since December. In the cash market, gas bound for the NYMEX delivery point Henry Hub NG-W-HH in Louisiana was heard down 9 cents early at $2.71 on volume near 536 million cubic feet. Early cash deals also eased slightly to about 8 cents over the front month, from a 9-cent premium late Monday. Gas on the Transco pipeline at the New York citygate NG-NYCZ6 was heard down 7 cents at $2.84 on volume near 239 mmcf. The National Weather Service's six- to 10-day outlook issued on Monday again called for above-normal temperatures across nearly the entire nation, with below-normal readings only on the West Coast. On the nuclear front, total outages were about 8,600 megawatts, or 9 percent of U.S. capacity on Tuesday, up from 7,800 MW out on Monday and a five-year outage rate of about 5,900 MW, but down from 10,600 MW out a year-ago. STORAGE STILL BLOATED Last week's gas storage report from the U.S. Energy Information Administration showed total domestic gas inventories rose the previous week by 47 billion cubic feet to 3.308 trillion cubic feet. (Storage graphic: link.reuters.com/mup44s) Despite the build coming in above weekly expectations for a 38-bcf gain, it was below both last year's rise of 66 bcf and a five-year average gain of 53 bcf for that week, a 17th straight week storage builds have fallen below seasonal norms. The build trimmed the surplus to last year to 423 bcf, or 15 percent, above the same week in 2011. It also cut the excess versus the five-year average to 357 bcf, or 12 percent. While a huge inventory surplus, which peaked in late March at nearly 900 bcf above a year earlier, has been cut in half, storage remains at record highs for this time of year. At 81 percent full, stocks are at levels not normally reached until the third week of September and offer a huge cushion that can help offset any weather-related spikes in demand or Gulf Coast supply disruptions from storms. With summer heat winding down, concerns remain that the storage overhang could drive prices to new lows this autumn if inventories climb to levels that test the government's 4.1-tcf estimate of capacity. Early injection estimates for this week's EIA report range from 46 bcf to 74 bcf versus a year-earlier build of 60 bcf and the five-year average increase for the week of 62 bcf. DRILLING RIGS EDGE UP FROM 13-YEAR LOW The number of rigs drilling for natural gas in the U.S. rose last week for the first time in seven weeks, rising two from the previous week's 13-year low to 486, data from Houston-based oil services firm Baker Hughes showed on Friday. (Graphic: r.reuters.com/dyb62s) The count rose for only the sixth time this year. The nearly steady decline in gas-directed drilling over the last 10 months has fed expectations that producers were getting serious about stemming the flood of record supplies. But so far there is little evidence that gas output is slowing. (Reporting by Eileen Houlihan; Editing by Sofina Mirza-Reid)

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