NEW YORK, July 8 (Reuters) - U.S. natural gas futures moved sharply higher on Monday, underpinned by extended forecasts for warmer weather in the Northeast and Midwest and concerns about a new storm in the western Atlantic Ocean. "We're in a bit of a warming trend, so there's more power load around," a Texas-based producer said. Despite concerns about Tropical Storm Chantal, traders noted early computer runs showed the system steering clear of key Gulf of Mexico gas-producing areas. The storm was seen heading across the northern Caribbean, then turning north toward the east coast of Florida. At 10:25 a.m. EDT (1325 GMT), front-month gas futures on the New York Mercantile Exchange were up 12 cents, or 3.4 percent, at $3.737 per million British thermal units, after trading between $3.612 and $3.742. The contract hit a 3-1/2 month low of $3.526 in late June. Early cash quotes for Tuesday delivery at Henry Hub , the benchmark supply point in Louisiana, climbed 13 cents to $3.65 on heavy volume of about 650 million cubic feet. Early Hub differentials weakened to about 4 cents under NYMEX from a 3 cent discount on Friday. Prices on Transco pipeline at the New York citygate rose 26 cents to $4.06 on the warm early-week weather despite the milder outlook for later in the week. Volume was light at about 120 mmcf. Heat for the next two weeks remains focused in the West and across northern tier states from the upper Midwest to Northeast, according to forecaster MDA Weather Services. Readings in the Southeast were expected to average below normal. With gas inventories only slightly below average for this time of year and production still flowing at or near a record peak, many traders expect price gains to be limited even if weather forecasts remain fairly supportive. Early injection estimates for Thursday's Energy Information Administration storage report range from 86 to 102 billion cubic feet, versus a 34 bcf build during the same week last year and a five-year average increase for that week of 74 bcf. Traders were waiting for clues on production when EIA releases its short-term energy outlook on Tuesday.