NEW YORK, Aug 29 (Reuters) - U.S. natural gas futures lost ground on Wednesday for a fifth straight session, with record high supplies and bearish technicals driving the front contract to a new 10-week low ahead of expiration. Traders shrugged off concerns about Hurricane Isaac and focused instead on slowing summer demand and lofty supply. At 9:10 a.m. EDT (1310 GMT), front-month September gas futures on the New York Mercantile Exchange, which expire Wednesday, were down 2.4 cents, or nearly 1 percent, at $2.59 per million British thermal units after sinking early to $2.575, the lowest level since late June. The front contract, which hit its high for the year at $3.28 in late July, has lost 7.5 percent over the previous four sessions. It is down more than 18 percent so far this month as temperature extremes moderated and slowed overall demand. Isaac slammed into the Louisiana coast early Wednesday as a Category 1 hurricane. But the system, which on Tuesday had cut nearly 70 percent of daily offshore Gulf gas production, or 3 billion cubic feet, was not expected to do any long-term damage to offshore oil and gas producing facilities. Severe onshore flooding was the main threat from Isaac, which was poised to move inland at a relatively slow 6 mph. Chart traders said Monday's front-month close below key support at $2.70 followed by a second lower close on Tuesday turned the chart picture bearish and set the stage for more downside. With Fibonacci retracement support in the $2.60 area breached Wednesday morning, traders pegged next support along the up trendline in the mid-$2.50s drawn from the April and June lows. Further buying was expected at $2.50. With inventories still at record highs for this time of year and production flowing at or near an all-time peak, traders said there were few worries about gas supplies this year. Some expect Isaac to have a bearish impact, slowing demand in the South and Midwest as heavy clouds and rain cool inland temperatures. While temperatures have moderated somewhat from the record heat in July, traders said there was still some lingering warmth expected this week in the Midwest and Northeast, key gas consuming regions, that should stir demand. But private forecaster MDA EarthSat expects the heat to pull out of the Northeast early next week. Most of the eastern half of the nation should see seasonal temperatures late next week. Most analysts agree that gas prices need to stay between $2.50 and $3 heading into autumn in order to encourage utilities to burn gas rather than coal to generate power. A loss of that demand could lead to larger weekly storage builds and stir concerns about inventories testing total capacity before winter. HIGH STORAGE, OUTPUT Record heat this summer has helped slow weekly storage builds to below the seasonal norm for 17 straight weeks, but with summer heat fading, builds are expected to pick up. Injection estimates for Thursday's Energy Information Administration report range from 49 billion to 74 billion cubic feet, with most in the low-60s. Stocks rose an adjusted 60 bcf during the same week last year. The five-year average increase for that week is 62 bcf. EIA data last week showed that gas inventories were still at record highs for this time, hovering at a level not normally reached until the third week of September. (Storage graphic: link.reuters.com/mup44s) While the Baker Hughes gas drilling rig count has fallen in 12 of the last 14 weeks to a 13-year low, traders note there is little evidence so far that gas output is slowing. (Rig graphic: r.reuters.com/dyb62s ) Dry gas drilling may be largely uneconomical at current prices, but the associated gas produced from more profitable shale oil and shale gas liquids wells is likely to keep gas production at a record high for a second straight year. (Reporting by Joe Silha; Editing by Bernadette Baum)

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