* Milder weather on tap for consuming regions * Isaac storm shut-ins slowly return to service * Coming up: API oil data Wed., EIA oil, gas data Thurs. By Eileen Houlihan NEW YORK, Sept 5 (Reuters) - U.S. natural gas futures edged lower early on Wednesday, pressured by milder autumn weather on tap for consuming regions of the nation in the coming days and weeks. In addition, most shut-in gas from Hurricane Isaac has been returning to service over the past few days, with few reports of damage from the low-level Category 1 storm. Isaac came ashore early last week in southeastern Louisiana, shutting more than 70 percent, or more than 3.26 billion cubic feet per day, of offshore U.S. natural gas production for most of last week. By Tuesday only 29 percent of offshore production remained off line, a government report showed. Some traders said strong nuclear outages could help support prices over the low-demand, autumn shoulder period, but most expect futures to have a hard time breaking back above $3 per million British thermal units, the level at which gas loses much of its appeal over coal for power generation. As of 9:14 a.m. EDT (1314 GMT), front-month October natural gas futures on the New York Mercantile Exchange were at $2.807 per mmBtu, down 4.7 cents, or nearly 2 percent. The nearby contract peaked at $3.277 in late July, its highest mark since December. The National Weather Service's six- to 10-day outlook issued on Tuesday called for mostly normal temperatures in consuming regions in the Northeast and Midwest and below-normal readings in the Southeast and along the West Coast. Above-normal readings were on tap for other parts of the West. On the nuclear front, outages totaled 8,900 megawatts, or 9 percent of U.S. capacity on Wednesday, down from 9,700 MW out on Tuesday, but up from 8,700 MW out a year ago and a five-year outage rate of 5,900 MW. STORAGE STILL BLOATED Last week's gas storage report from the U.S. Energy Information Administration showed domestic gas inventories rose the previous week by 66 billion cubic feet to 3.374 trillion cubic feet. (Storage graphic: link.reuters.com/mup44s) The build came in above expectations for a 61-bcf gain, as well as last year's rise of 60 bcf and a five-year average gain of 62 bcf for that week. It was the first time in 18 weeks the stock build exceeded the seasonal norm. While a huge inventory surplus has been cut in half, storage remains at record highs for this time of year. At 82 percent full, stocks are at levels not normally reached until late September and offer a huge cushion that can help offset any weather-related spikes in demand or further supply disruptions from storms. There are still concerns that the storage overhang could drive prices to new lows if stocks climb to levels that test the government's 4.1-tcf estimate of capacity. Most traders expect shut-ins from Isaac to curb this week's injection, with early estimates for this week's EIA report ranging from 25 bcf to 53 bcf versus a year-earlier build of 62 bcf and the five-year average increase for the week of 60 bcf. DRILLING RIGS SINK TO 13-YEAR LOW The number of rigs drilling for natural gas in the United States slid by 13 last week to a 13-year low of 473, data from Houston-based oil services firm Baker Hughes showed on Friday. (Graphic: r.reuters.com/dyb62s) The count slid for the 13th time in 15 weeks. 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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