UPDATE 3-U.S. natgas futures end down for 3rd day, forecasts moderate
* Early-week heat in Northeast, Midwest seen moderating * Milder trend late next week pressures prices By Joe Silha NEW YORK, June 24 (Reuters) - U.S. natural gas futures ended lower for a third straight session on Monday, with milder forecasts for later this week and next week outweighing the heat currently blanketing the Northeast and Midwest. Front-month futures have lost nearly 6 percent in the last three trading sessions amid signs that the extended weather outlook was trending milder. It's the biggest three-day drop for the near month in seven weeks. "The latest NOAA six- to 10-day and eight- to 14-day forecasts are certainly less supportive than those from earlier last week," Energy Management Institute's Dominick Chirichella said in a report, noting cooling demand during the period will likely fall well below last year at this time. While heat is forecast for Texas and the West later this week and next, MDA Weather Services expects seasonal or below seasonal temperatures to dominate the eastern half of the nation during the six-to-10-day period. Front-month July gas futures on the New York Mercantile Exchange, which expire on Wednesday, ended down 3.2 cents, or 0.8 percent, at $3.739 per million British thermal units after trading between $3.725 and $3.822. Technical traders noted that so far the front contract has managed to hold above support in the $3.70 area. A close below that level could set up a test of next support at about $3.50. Without a sustained, broad-based heatwave, many traders remained skeptical of any upside with inventories comfortable and gas production still flowing at or near a record high. Gas prices two weeks ago posted a three-month low of $3.71, making gas nearly competitive with coal for power generation. But a steep drop in Central Appalachian coal prices last week to an eight-month low below $54 per short ton should keep coal the fuel of choice for electric utilities, at least for now. Baker Hughes data on Friday showed the gas-directed rig count fell last week to an 18-year low of 349. But despite a steep drop in dry gas drilling over the last 20 months, production has not slowed much, if at all. Early injection estimates for Thursday's Energy Information Administration storage report range from 75 billion to 95 billion cubic feet, versus a 58-bcf build during the same week last year and a five-year average rise for that week of 79 bcf.