UPDATE 3-U.S. natgas futures end lower, 1st drop in 5 sessions
* Milder weather expected next week seen slowing demand * Nuclear power plant outages still above average * Stock-building season off to a slow start By Joe Silha NEW YORK, April 22 (Reuters) - U.S. natural gas futures ended lower on Monday for the first time in five sessions, undermined by milder weather forecasts that should finally slow heating demand after a few more days of cold weather. Cold late-winter weather, a chilly spring and above-average nuclear plant outages put a huge dent in gas inventories that were at a record high in November. This has lifted price expectations for this year. The front contract, which gained 4.4 percent last week in its ninth straight weekly rise, is up 40 percent since mid-February. But with weather expected to turn milder soon and slow space heating needs, concerns are growing that the market may be ripe for a pullback. "We had no (price) movement on Friday which may have been a signal that the up trend was running out of steam. Sooner or later winter is going to be over," said Tom Saal, senior vice president at INTL FCStone in Miami. Front-month gas futures on the New York Mercantile Exchange ended down 14.1 cents, or 3.2 percent, at $4.267 per million British thermal units after stalling overnight at $4.397, just below Thursday's 21-month high of $4.429. Traders noted that gas prices have climbed to levels that should dampen demand by prompting more utilities to switch back to cheaper coal for power generation. High prices may also tempt producers to turn on more wells, increasing supply. Record growth in futures open interest that has accompanied recent price gains has also raised concerns investors with long positions may rush to take profits when moderating spring temperatures finally slow heating load. After one last cold push this week, forecaster Commodity Weather Group expects the weather pattern for the six- to 15-day range to shift to milder, with seasonal or above-seasonal readings likely to dominate most of the country. INJECTION SEASON OFF TO SLOW START U.S. Energy Information Administration data last week showed total domestic gas inventories rose by 31 billion cubic feet to 1.704 trillion cubic feet. Most traders viewed the build as supportive for prices, noting it came in below the Reuters poll estimate of 34 bcf and below the five-year average increase for that week of 39 bcf. The season's first injection, which came about three weeks later than usual, widened the storage deficit relative to the five-year average by 8 bcf, leaving stocks at 74 bcf, or 4 percent, below that benchmark. Chilly weather this month is expected to continue to slow inventory builds and drive stocks further below the five-year average for the next couple of weeks. Early injection estimates for Thursday's EIA report range from 19 to 48 bcf, versus a 43-bcf build during the same week last year and a five-year average rise for that week of 50 bcf. OUTPUT NOT SLOWING MUCH YET Baker Hughes data on Friday showed the gas-directed rig count rose last week by two to 379. Two straight weekly gains have stirred expectations that higher gas prices may be tempting producers to bring on more supply. The gas rig count posted a 14-year low of 375 two weeks ago. Drilling for natural gas has mostly been in decline for the past 18 months. The count is down about 60 percent since peaking in 2011 at 936, but so far production has not slowed much from the record high hit last year.