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* Weekly inventory decline beats estimates for third week * Record high production keeps buyers cautious * Coming up: Baker Hughes rig data, CFTC trade data Friday By Joe Silha NEW YORK, Jan 17 (Reuters) - U.S. natural gas futures ended higher on Thursday, the fifth gain in six sessions, backed by a bullish weekly inventory report and fairly cold forecasts for the next 10 days that should force homeowners and businesses to turn up their heaters. U.S. Energy Information Administration data on Thursday showed total domestic gas inventories fell last week by 148 billion cubic feet to 3.168 trillion cubic feet. Traders viewed the decline as bullish, noting it was well above the Reuters poll estimate of 136 bcf and the third straight week that the inventory draw exceeded expectations. Traders said stronger than expected demand recently may reflect a structural, permanent growth in gas use this year, likely driven by utilities switching away from coal to cheaper gas for power generation. "Today's 148 Bcf draw from natural gas storage was bullish relative to street expectations," Mike Tran, analyst at CIBC World Markets, said in a report. Noting the market's recent sensitivity to weather, Tran said cold weather forecast for the U.S. Midwest and East in coming days may support prices, but under-hedged producers should continue to be quick to cap rallies in the near term. Front-month gas futures on the New York Mercantile Exchange ended up 5.9 cents, or 1.7 percent, at $3.494 per million British thermal units, after climbing to an intraday high of $3.529 after the EIA report. The front contract has gained more than 12 percent in six sessions. Technical traders noted today's gain put the near month above the 40-day moving average in the $3.46 area, the first time above that resistance point in six weeks. But despite colder weather ahead that should lend some support to prices, many traders remain skeptical of the upside, with inventories still relatively high and production flowing at or near an all-time peak. In addition, they note that if gas prices try to climb much higher, to near the $4 mark, gas could lose its competitive edge and prompt some power generators to switch back to coal. MDA Weather Services on Thursday said widespread much-below to strong-below normal temperatures were still projected from the Midwest to the Northeast during the first few days of the six- to 10-day time frame, but the private forecaster did note that most computer models point to a warm-up after that. ANOTHER BIG STORAGE DRAW The weekly draw sharply widened the storage deficit relative to last year by 59 bcf to 147 bcf, or 4 percent. While it also trimmed 4 bcf from the surplus versus the five-year average, stocks are still high at 316 bcf, or 11 percent above average. Early withdrawal estimates for next week's storage report range from 122 bcf to 190 bcf. Stocks fell an adjusted 162 bcf during the same week last year, while the five-year average decline for that week is 176 bcf. If drawdowns for the rest of winter match the five-year average pace, inventories will end the heating season at 2.044 tcf, about 18 percent above normal but nearly 18 percent below last year's end-winter record of 2.48 tcf. PRODUCTION STILL NEAR RECORD HIGH Traders were waiting for the next drilling rig report from Baker Hughes on Friday. Drilling for natural gas has mostly been in decline for more than a year, with gas rigs down some 54 percent since peaking in 2011 at 936 in October. The gas count is not far above the 13-1/2-year low of 413 posted two months ago, but so far production has not shown any signs of slowing. EIA last week said it expected marketed gas production in 2013 to rise nearly 1 percent to an average of 69.84 bcf daily, the third straight year of record output.