UPDATE 3-Cold forecast drives front U.S. natgas futures to 6-mth high
* Mild weather this week slows demand, cold returns next week
* Record production, comfortable storage could limit upside
By Joe Silha
NEW YORK, Dec 2 (Reuters) - U.S. natural gas futures shrugged off this week's milder weather to end higher on Monday, with the front month driven to a six-month high by colder weather forecasts for next week that should trigger another strong run up in heating demand.
The nearby contract, which has gained for eight straight sessions, finished the holiday-shortened week last week up 4.9 percent. Chilly temperatures in November helped drive the front month up 12.8 percent, its biggest four-week climb in nearly eight months.
While milder weather this week could prompt some profit taking or long liquidation, traders said the much colder outlook for next week should help limit any downside even with lingering concerns about comfortable inventories and record high domestic production.
"Current weather forecasts paint a very cold picture for December with frigid air expected to sweep through the nation creating a large amount of heating demand in the Northeast and Midwest," Gelber & Associates analyst Aaron Calder said, noting the deep freeze was also expected to reach into Texas.
After a mild week this week, private forecaster MDA Weather Services expects cold temperatures to stretch across most of the country next week and continue in northern tier states in the 11- to 15-day period.
Front-month gas futures on the New York Mercantile Exchange settled up 3.4 cents, or 0.9 percent, at $3.988 per million British thermal units. The contract posted a six-month high of $3.993 in after hours trade following the day session close. Continued...