UPDATE 3-U.S. Nov natgas futures expire down 2 pct after 5-week low
* Nov futures expire on weak note, close below chart support
* Milder weather outlook keeps gas prices on the defensive
* Comfortable stockpiles, record production also weigh
* Coming Up: Reuters natgas storage poll Wednesday (New throughout; adds byline, trader quote; updates futures and cash prices)
By Eileen Houlihan and Joe Silha
NEW YORK, Oct 29 (Reuters) - U.S. natural gas futures closed lower for a second straight day on Tuesday, with mild weather forecasts driving the front November contract to a 5-week low just before a soft expiration.
"It's all about the (mild) weather. We're walking around without jackets again," a Chicago-based trader said.
Technical traders noted that the nearby contract had tested and held support in the $3.50s per mmBtu over the last week or so but finally settled below that level on Tuesday, a potentially bearish sign.
The nearby contract, which had lost 1.8 percent in the previous two weeks, is down 5.7 percent so far this week as mild forecasts through the first half of November weighed on sentiment.
Front-month November gas futures on the New York Mercantile Exchange expired down 7.3 cents, or 2 percent, at $3.496 per million British thermal units after sinking late to $3.48, the lowest for the nearby contract since Sept. 26.
The near month will get a psychological boost on Wednesday when December futures take over the front position with a 13-cent premium to the expired November contract.
But while the market is technically oversold and due for a bounce, many traders remained skeptical of the upside without some sustained cold to kick up heating needs, noting stockpiles stand at comfortable levels and production is still flowing at or near a record-high pace.
The National Weather Service six-to-10-day and eight-to-14-day outlooks released on Monday showed mostly above-normal temperatures stretching from Texas to New England.
U.S. Energy Information Administration data last week showed total domestic gas inventories at 3.741 trillion cubic feet, 2.4 percent below last year's record highs at that time, but 2.1 percent above the five-year average.
The storage outlook for Thursday was more supportive. Injection estimates range from 26 billion to 43 billion cubic feet, with most in the mid-30s. That would be well below the 66 bcf build seen during the same year-ago week and the five-year average increase for that week of 57 bcf.
The Baker Hughes gas drilling rig count has increased in 11 of the last 18 weeks, stirring talk that new pipelines and processing plants may be encouraging producers to pump more gas into an already well-supplied market.
The EIA still expects U.S. gas production in 2013 to hit a record high for the third straight year.
In the ICE cash market, gas for Wednesday delivery at Henry Hub GT-HH-IDX, the benchmark supply point in Louisiana, fell 6 cents to $3.56, with late Hub differentials easing slightly to 4 cents over NYMEX from a 5-cent premium on Monday.
Gas on the Transco pipeline at the New York citygate E-TSCO6NY-IDX lost 7 cents to $3.70 on the mild Wednesday outlook. Chicago MC-CHICIT-IDX was 9 cents lower at $3.74. (Editing by Jim Marshall, Chris Reese and James Dalgleish)
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