* Near-term chill underpins price gains
* Milder outlook for late this week, next week limits upside
* Comfortable storage, record production also weigh (New throughout, adds byline, analyst quote, updates prices)
By Eileen Houlihan and Joe Silha
NEW YORK, Nov 11 (Reuters) - U.S. natural gas futures ended higher for a fifth straight session on Monday, with cold weather expected for the eastern half of the nation this week propping up prices despite the milder outlook for next week that should slow demand.
The front-month contract posted a 2-1/2 month low of $3.379 per million British thermal units early last week, but it finished the week up 1.3 percent, its first weekly gain in four weeks, as cold weather settled across the country and forced homeowners and businesses to crank up their heaters.
But doubts that the extended outlook will remain cold helped limit the upside, particularly with inventories comfortable and production flowing at a record high pace.
“There is some cooler weather which is supportive, but people are uncomfortable with the volatility in the weather models and that’s keeping both buyers and sellers cautious,” said Kyle Cooper, managing partner at IAF Advisors in Houston.
Front-month gas futures on the New York Mercantile Exchange ended up 1.5 cents at $3.574 per mmBtu, after trading in a narrow range between $3.542 and $3.598.
After a few more days of cold, MDA Weather Services expects temperatures for states east of the Mississippi River to moderate to above normal later this week and part of next week before cooling to seasonal or below seasonal later.
U.S. Energy Information Administration data last week showed total gas inventories had climbed to 3.814 trillion cubic feet, 2.9 percent below last year’s record highs at that time but 1.5 percent above average.
Injection estimates for Thursday’s storage report range from 7 billion to 36 billion cubic feet, with most in the low-20s. That would compare to a 12 bcf draw during the same year-ago week and a five-year average increase of 19 bcf for that week.
Baker Hughes data on Friday showed that the gas drilling rig count rose last week for the third time in four weeks, gaining five to 365. The gas rig count has risen in 12 of the last 20 weeks.
A rising gas rig count can stir talk that new pipelines and processing plants, particularly in the East, may be encouraging producers to hook up more wells and pump more supply 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 Tuesday delivery at Henry Hub GT-HH-IDX, the benchmark supply point in Louisiana, climbed 8 cents to $3.62, with late differentials firming to 6 cents over NYMEX from a 6-cent discount on Friday.
Gas on the Transco pipeline at the New York citygate E-TSCO6NY-IDX jumped 47 cents to $3.82 on the chilly midweek outlook. Chicago MC-CHICIT-IDX was 10 cents higher at $3.76.
For daily ICE U.S. cash gas prices, click on <0#GAS-IDX=ICE>. (Editing by Lisa Von Ahn and Jim Marshall)