* Cash prices trade mixed after four straight losses
* Henry Hub cash differential weakens relative to futures
* Coming up: Baker Hughes rig data, CFTC trade data Friday
NEW YORK, March 1 (Reuters) - U.S. spot natural gas prices traded narrowly mixed Thursday after four straight losing sessions, as high supplies and mild late-winter weather were offset by signs the market may be tightening.
Gas for Friday delivery at Henry Hub NG-W-HH, a key supply point in Louisiana, edged up 1 cent to $2.45 per million British thermal units, but late-morning deals weakened to 13 cents under NYMEX from a 10-cent discount on Wednesday.
The daily Hub average is below the February monthly index of $2.67 and well below the year-ago price of $3.93 and the $4.83 mean on the same day in 2010.
The Hub mostly traded at a premium to front-month futures in February, as unexpected nuclear plant outages, a steep decline in gas drilling and planned production cuts by several key producers helped tighten the market.
Cheap gas prices hovering just above 10-year lows also likely prompted more industrial use and triggered some additional utility fuel switching from more expensive coal.
But a huge inventory surplus and fairly mild end-winter forecasts may be pressuring sentiment this month, particularly with concerns that storage ratchets, or contractual obligations, may force some to cycle gas out of inventory to meet minimum turnover requirements before the end of the season on March 31.
In major consumer markets, next-day prices for gas on the Transco pipeline at the New York City gate NG-NYCZ6 rose 2 cents to $2.68 despite the milder Friday outlook. Chicago NG-CHGC was 1 cent higher at $2.51.
AccuWeather.com expects temperatures in the Northeast and Midwest, key gas-consuming regions, mostly to average above normal for the next 10 days, with daytime highs at times climbing to the mid- or high 50s Fahrenheit.
STORAGE STILL A BIG PROBLEM FOR BULLS
Most traders agreed Thursday's weekly inventory report was bearish, noting the 82 billion cubic feet withdrawal was below the Reuters poll estimate of 90 bcf and well below the five-year average decline for that week of 118 bcf.
The U.S. Energy Information Administration report showed total domestic inventories of 2.513 trillion cubic feet were still at record highs for this time of year, standing at 756 bcf, or 43 percent, above last year and 780 bcf, or 45 percent, above the five-year average level.
(Storage graphic: link.reuters.com/mup44s)
While on an absolute basis, the stock draw was seen as bearish, traders noted recent inventory reports have hinted at a modest tightening in the supply-demand balance. But the slightly supportive data so far has failed to stir buying.
Late-season nuclear plant outages are still running about 6,600 megawatts above normal for this time of year, which could add more than 1 billion cubic feet to daily gas demand.
And planned output cuts by producers could trim 1 bcf per day from flowing supply.
But the specter of stocks ending winter at an all-time high above 2.2 tcf was making it difficult to be bullish on prices in the near term, particularly with winter ending on a mild note and production running at or near record highs.
Early withdrawal estimates for next week's EIA report range from 66 bcf to 95 bcf versus last year's adjusted drop of 63 bcf and the five-year average decline for that week of 92 bcf.
The inventory overhang could also spell trouble for prices late in the summer stock-building season if storage caverns fill to capacity and force more supply into the market.
Estimates for U.S. working gas storage capacity range from 4.1 tcf to 4.4 tcf, a level that could be tested if storage builds from April through October match last year's 2.2 tcf.
PRODUCTION STILL HIGH
Traders are waiting for the next Baker Hughes drilling rig report on Friday after last week's data showed the gas count slid to its lowest since September 2009. It was the seventh straight weekly decline and stirred more talk that low prices were finally forcing drillers to slow dry gas operations.
EIA data on Wednesday showed that December gross natural gas production in the lower 48 U.S. states slipped slightly from a record high in November. It was the first decline in 10 months.
But the EIA said the largest decline, seen in Wyoming, was partly due to a compressor fire. Output in key shale plays such as Marcellus continued to grow.
(Rig graphic: r.reuters.com/dyb62s)
Analysts agree it can take months for a slowdown in drilling to translate into lower production, noting the producer shift in spending to higher-value oil and gas liquids plays still produces plenty of associated gas that partly offsets any reductions in pure dry gas output.
A Bernstein Research report last week said the gas-directed rig count would have to drop to about 600 before it would be comfortable forecasting flat to falling production.
Most analysts, noting it will be difficult to balance the gas market without serious production cuts, do not expect any major slowdown in gas output until late this year.
In New York Mercantile Exchange trade, front-month gas futures ended down 15.3 cents, or 5.8 percent, at $2.463, pressured by a bearish weekly inventory report and mostly mild U.S. weather.
Average prices at other spot gas market points and previous day prices follow (US$/mmBtu)
03/01/12 02/29/12 Henry Hub 2.45 2.44 New York city gate 2.68 2.66 Chicago city gate 2.51 2.50 Panhandle (Mid-continent) 2.29 2.29 Northern at Demarcation (Minn.) 2.44 2.43 Southern California Border 2.58 2.60 Katy Hub (East Texas) 2.36 2.37 Waha (West Texas) 2.34 2.36 Dominion-South (Appalachia region) 2.48 2.47 Columbia TCO (Appalachia region) 2.48 2.47
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- U.S. Nuclear Power Reactor Outage Table ......
- North American Power Plant Outage Table .....
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- U.S. EEI Electricity Output Report ...........
- U.S. EEI Electricity Output Table ............ EEI-
- NYMEX Natural Gas Futures .................... <0#NG:>
- NYMEX Crude Oil Futures .......................<0#CL:> (Reporting By Joe Silha)