UPDATE 3-U.S. natural gas futures end up, 1st gain in 3 sessions
* Front month hits five-week low, then ends higher * Spring weather finally arrives in much of the country * EIA sees 2013 gas output up 1 pct from 2012 record high * Coming up: EIA, Enerdata natural gas storage data Thursday By Joe Silha NEW YORK, May 8 (Reuters) - U.S. natural gas futures ended higher on Wednesday for the first time in three sessions on technical buying and bargain hunting ahead of Thursday's inventory report despite concerns that moderating spring weather will continue to slow demand. Some traders said the market was oversold and due for a bounce after sliding 3 percent in the previous two sessions, but many remained skeptical of the upside with production still flowing at or near a record high and consumption tapering. "It looked like an oversold, technical rebound, but I don't think the fundamentals are sufficient to sustain a move above $4 (per mmBtu). If you look at the weather, it's not supportive right now," said Richard Hastings, macro strategist at Global Hunter Securities in North Carolina. Moderate temperatures have been making previously bullish traders nervous. The milder weather follows a cold winter and chilly spring that whittled down record high storage and drove gas prices up more than 40 percent from mid-February lows. Front-month gas futures on the New York Mercantile Exchange ended up 5.8 cents, or 1.5 percent, at $3.978 per million British thermal units after sliding overnight to a five-week low of $3.895. The front contract lost 2.7 percent last week, its second straight weekly decline after nine consecutive weeks of gains. It is still down about 1.6 percent so far this week. After breaching minor support at the 20-day and 40-day moving averages over the last week or so, chart traders noted Tuesday's weak close broke support in the $3.94 area, which was the 38.2 percent Fibonacci retracement of the move up from the February low of $3.125 to last week's 21-month high of $4.444. Some traders remained concerned that record high net long positions held by speculative investors could trigger a sharp sell-off as demand fades and new length rushes to cash out. Expectations for a string of above-average weekly storage builds as temperatures moderate have also weighed on prices. Last Thursday's unexpectedly-large inventory build triggered a 7-percent selloff, the biggest one-day drop in nine months. While there are still below-normal temperatures in the forecast, particularly for Texas and the Southeast, traders noted normal highs are on the rise as summer approaches and below-normal readings in May are not likely to trigger much heating or cooling load. Some traders expect gas prices to remain under pressure, at least until homeowners and businesses crank up air conditioners. After a brief cold push early next week, Commodity Weather Group expects mostly seasonal temperatures to dominate the Midwest, East and South over the 11- to 15-day time frame. ANOTHER BIG INVENTORY BUILD EXPECTED Last week's storage build was only the third injection of the stock building season, but it did exceed market expectations and prices fell sharply immediately after the report. Traders and analysts polled by Reuters are looking for an above average storage build when the U.S. Energy Information Administration releases weekly inventory data on Thursday, with most expecting a gain of 83 billion cubic feet. Stocks rose 30 bcf during the same week last year, while the five-year average increase for that week is 69 bcf. EIA data last week showed that total domestic gas inventories had climbed to 1.777 trillion cubic feet, about 118 bcf, or 6 percent, below the five-year average. PRODUCTION CLIMBS DESPITE FEWER RIGS The Baker Hughes gas drilling rig count has fallen to an 18-year low, but so far production has not slowed much, if at all, from the record high hit last year. The EIA on Tuesday raised its estimate for domestic natural gas production in 2013, expecting output this year to be up about 1 percent from 2012's levels. If realized, it would be the third straight year of record production.