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* High inventories, record production limit price gains * Warm up late this week and next week keeps buyers cautious * Coming up: Reuters weekly natgas storage poll Wednesday By Joe Silha NEW YORK, Feb 5 (Reuters) - Front-month U.S. natural gas futures ended higher on Tuesday for a second day, reacting to fairly cold Northeast and Midwest forecasts for the next few days that should drive up gas use to heat homes and businesses. "There's some cold weather coming in, but it's supposed to moderate next week. I think prices could come off later in the week if it still looks like it's going to warm up," a Pennsylvania-based trader said. Some traders said time may be running out for price bulls, with winter winding down and forecasts out two weeks showing cold over the western half of the nation but above normal temperatures for the key gas consuming eastern region. Front-month gas futures on the New York Mercantile Exchange ended up 8.4 cents, or 2.5 percent, at $3.399 per million British thermal units after trading in a range between $3.318 and $3.407. The nearby contract, which hit a 6-1/2-week high of $3.645 two weeks ago, has gained 3 percent in the last two sessions following a 4.2 percent slide last week. But while gas prices have tried to rally since last week's low in the $3.20 area, traders noted that the move up has been difficult, with inventories still relatively high, production flowing at or near a record peak and no sustained cold to seriously whittle down excess supplies. Commodity Weather Group on Tuesday said there were some slightly warmer adjustments in its six-to-10-day forecast for the Midwest, East, and South, while colder changes were made in the 11-to-15-day outlook. The private forecaster still expects cold to dominate the western half of the nation by mid month, but above normal temperatures remain in the extended outlook for the Northeast. While chart traders agreed the technicals still look bearish, with a possible bear flag forming during the last week, some noted the front contract on Tuesday settled above minor resistance at the 40-day moving average in the $3.37 area. STORAGE DRAW FALLS SHORT EIA data last week showed that gas inventories for the week ended Jan. 25 fell by 194 billion cubic feet to 2.802 trillion cubic feet. Most traders viewed the decline as slightly bearish, noting it was the first time in five weeks that the weekly inventory withdrawal had fallen short of market expectations. While the draw trimmed 16 bcf from the surplus versus the five-year average, traders noted that storage was still relatively high at 304 bcf, or 12 percent, above that benchmark. Withdrawal estimates for Thursday's inventory report range from 125 to 158 bcf. Stocks fell 94 bcf during the same week in 2012. The five-year average decline for that week is 165 bcf. If drawdowns for the rest of winter match the five-year average, inventories will end March at 2.032 tcf, about 18 percent above normal, but 18 percent below last year, when stocks finished a mild heating season at a record-high 2.48 tcf. PRODUCTION FAILS TO SLOW DESPITE RIG DECLINES Baker Hughes data on Friday showed the gas-directed drilling rig count fell last week for the third time in four weeks, dropping by six to 428. While the gas rig count is hovering not far above the 13-1/2-year low of 413 hit three months ago, production has shown no significant sign of slowing. The U.S. Energy Information Administration estimates that marketed gas output in 2013 will hit a record high for the third straight year.