UPDATE 3-Front U.S. natgas futures end down, retreat from 4-month high
* Late profit taking pressures futures prices
* Colder weather forecasts for most of nation limit downside
* No weekly EIA inventory data due to government shutdown (New throughout, adds byline, trader quote, Reuters weekly storage poll)
By Eileen Houlihan and Joe Silha
NEW YORK, Oct 16 (Reuters) - U.S. natural gas futures ended lower for a second straight day on Wednesday, hit by a late wave of profit taking after cooler weather forecasts helped drive the front-month contract to near a four-month high early in the session.
"This was probably just a little profit taking. Buyers looked like they ran out of bullets late in the day," a New York-based trader said.
The nearby contract, which gained 7.7 percent last week on production cuts from Tropical Storm Karen and the cooler trend in weather forecasts, is down fractionally so far this week.
Last week's gain was the biggest weekly run up since last November, and colder weather expectations could trigger even more buying, but technical traders said the market was a little overbought and due for a pullback.
Commodity Weather Group noted that the six- to 15-day outlook continued to trend colder, raising prospects for stronger heating demand particularly for the Midwest but also for the South and East.
Front-month gas futures on the New York Mercantile Exchange ended down 2.1 cents at $3.769 per million British thermal units, after climbing early to $3.869, its highest since June 21.
With winter just around the corner, the bears may feel on the defensive, but some traders remain skeptical of the upside, noting inventories have climbed to comfortable levels and production was still flowing at or near a record high.
Supplies are more than adequate to meet even the coldest winter heating demand, traders said.
Traders and analysts polled by Reuters on average estimate that U.S. natural gas inventories rose last week by 80 billion cubic feet.
The U.S. Energy Information Administration will not issue weekly inventory data this week due to the government shutdown. But if the Reuters poll estimate is realized, it would be well above the 54 bcf build during the same week in 2012 and the five-year average gain for that week of 75 bcf.
EIA data last week showed total U.S. gas inventories stood at 3.577 trillion cubic feet, 3.7 percent below the year-earlier record highs but 1.6 percent above the norm for that week.
The EIA last week also raised its estimate for domestic gas production in 2013, expecting average output this year to post a record high for the third straight year.
While the Baker Hughes gas drilling rig count has fallen in three of the last four weeks, gas production has not showed any signs of slowing from its record-high pace.
In the ICE cash market, gas for Thursday delivery at Henry Hub GT-HH-IDX, the benchmark supply point in Louisiana, edged up 2 cents to $3.85, with late Hub differentials little changed from Tuesday at about 1 cent under NYMEX.
Next-day gas on Transco pipeline at the New York citygate E-TSCO6NY-IDX jumped 26 cents to $3.87 on the cooler late-week outlook. Chicago MC-CHICIT-IDX was unchanged at $3.94.
For daily ICE U.S. cash gas prices click on <0#GAS-IDX=ICE>. (Editing by Chris Reese, Marguerita Choy and David Gregorio)
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