* Front month sinks Wednesday to lowest since September * Long-term outlook for milder weather * Coming up: EIA natgas storage data Friday By Eileen Houlihan NEW YORK, Jan 3 (Reuters) - U.S. natural gas futures slid about 2 percent early on Thursday, extending losses for a third straight trading day due to moderating weather forecasts after some cold this week. But prices remained above Monday's three-month spot chart low. A huge, 30-cent, 9-percent drop in prices on Monday was blamed on an algorithmic, or electronic computer-driven trade. Still, prices have continued to struggle this week amid the milder weather outlooks that should curb heating needs and lessen demand for gas from winter storage. As of 9:12 a.m. EST (1412 GMT), front-month February gas futures on the New York Mercantile Exchange were at $3.173 per million British thermal units, down 6 cents, or about 2 percent. The front-month contract fell as low as $3.05 on Wednesday, a contract low and the lowest mark for a spot contract since late September. The latest National Weather Service six-to-10-day forecast issued on Wednesday again called for above-normal temperatures for a little more than the eastern half of the United States, with below-normal readings only in the West. Nuclear outages totaled just 7,500 megawatts, or 7 percent, of U.S. capacity, down slightly from 8,500 MW out on Wednesday, but up from 7,200 MW out a year ago and a five-year average outage rate of about 5,500 MW. WINTER STORAGE STILL BLOATED Last week's Energy Information Agency (EIA) gas storage report showed total domestic inventories fell 72 billion cubic feet to 3.652 trillion cubic feet, below market expectations for a 76 bcf draw. Inventories started the heating season in early November at an all-time high of 3.929 tcf and are still at record highs for this time of year, hovering at more than 2 percent above last year and 13 percent above the five-year average. Early withdrawal estimates for this week's report range widely from 68 bcf to 165 bcf, with most expecting a draw above 100 bcf. Stocks fell 77 bcf during the same year-ago week, and have dropped about 111 bcf on average that week over the past five years. The EIA report will be delayed by one day this week to Friday because of the New Year's Day holiday on Tuesday. RIGS GAIN, OUTPUT STILL NEAR RECORD Baker Hughes data on Friday showed the gas-directed rig count rose by two last week to 431, its second straight weekly gain. But drilling for natural gas has mostly declined for more than a year, with gas rigs down 54 percent since peaking at 936 in October 2011. The gas rig count is hovering just above a 13-1/2-year low of 413 hit seven weeks ago, but so far production has not shown any significant sign of slowing. The EIA expects gas output in 2013 to rise to a record high of 69.59 bcf per day, the third straight annual record.