* Front-month contract posts monthly decline of 3.5 pct * Near-record storage, production keep buyers cautious * Prices should remain under pressure without colder weather By Joe Silha NEW YORK, Nov 30 (Reuters) - Front-month U.S. natural gas futures ended lower on Friday, undermined by mild weather forecasts for next week that should slow demand and by a government report showing gas production in September had climbed to a record high. Chart traders noted the front contract bounced early as shorts covered ahead of the weekend after three days of declines. But bearish fundamentals eventually overwhelmed the price run up. "The weather looks bearish and the (EIA) gross production data was certainly bearish, but we may have over-adjusted to the downside," said Steve Mosley of the SMC Report, noting prices could rebound next week if the weather outlook turns colder. The front contract, which hit a 13-month high of $3.933 on Nov. 23, came under pressure this week as forecasts into early December trended milder. Also weighing on sentiment was a surprise inventory build on Thursday. Most traders in a Reuters poll had expected a net decline. Front-month gas futures on the New York Mercantile Exchange ended down 8.7 cents at $3.629 per million British thermal units. The nearby contract lost 8.7 percent this week in its biggest weekly decline in five months. For November, front futures posted a 3.5 percent drop, pressured by recent selling amid concerns that demand to heat homes and businesses will slow sharply next week as temperatures moderate. It was the first monthly drop since August. While high nuclear plant outages could lift demand for gas, traders said lighter power loads next week might reduce the need for replacement generation. Gas-fired plants are usually used to cover any lost nuclear generation. Most traders expect any price increases to be difficult without sustained cold to boost demand, with storage and production still at or near record highs. AccuWeather.com said it expected temperatures in the key gas-consuming regions of the Northeast and Midwest to average above to much-above normal for the next week, with highs at times topping 60 degrees Fahrenheit (15.6 Celsius). PRODUCTION STILL NEAR RECORD HIGHS Baker Hughes data on Friday showed the gas-directed rig count fell by four this week to 424, still just above the 13-1/2-year low of 413 posted three weeks ago. Drilling for natural gas has mostly been in decline for the last year, with gas rigs down nearly 55 percent since peaking last year at 936 in October. The steep slide has fed expectations that producers might curb record output, but so far production has not shown any significant signs of slowing. The associated gas produced from more-profitable shale oil and shale gas liquids wells has kept dry gas flowing at or near a record pace. U.S. Energy Information Administration data on Friday showed gross natural gas production in September had climbed to a record high of 73.05 billion cubic feet per day, eclipsing the previous record of 72.74 bcfd set in January. SURPRISE BUILD EIA data on Thursday showed domestic gas inventories had risen last week by 4 bcf to 3.877 trillion cubic feet. Traders viewed the build as bearish, noting a Reuters poll called for a 12-bcf draw, while the five-year average for that week was an 18-bcf decline. Only one of the 30 participants in the Reuters poll had expected stocks to gain. While a huge inventory overhang, which peaked in early April at nearly 900 bcf, has been almost wiped out, storage is still at record highs for this time of year and offers a comfortable cushion to meet any winter spikes in demand or unexpected disruptions in supply. Stocks hit a record high of 3.929 tcf three weeks ago, making this the fourth straight year in which inventories headed into the heating season at a record peak. Traders expect storage in next week's report to drop below year-ago levels for the first time in 13 months, with early withdrawal estimates ranging from 43 bcf to 90 bcf. Last year during that week, stocks fell 14 bcf, while the five-year average draw is 51 bcf.