* Cold extended weather forecasts boost prices
* Comfortable storage, record production limit upside
By Joe Silha
NEW YORK, Nov 22 (Reuters) - U.S. natural gas futures ended higher for a third straight day on Friday, with the front-month contract posting a fresh one-month high in the face of forecasts for cold weather late this week and next week that should lift demand for heating.
The nearby contract finished the week up 3 percent after gaining 4.2 percent in the previous two weeks. The combined rise of 7.3 percent was the biggest three-week climb in nearly three months.
“We’ve got some supportive weather coming in, and the storage report (on Thursday) was surprisingly bullish,” said Steve Mosley at The SMC Report in Arkansas.
MDA Weather Services expects mostly cold temperatures to stretch across the eastern two-thirds of the country for the next two weeks, with only a slight moderation late in that period.
Front-month gas futures on the New York Mercantile Exchange ended up 6.6 cents, or 1.8 percent, at $3.768 per million British thermal units after climbing to a one-month high of $3.779.
Chart traders said Friday’s close above near resistance in the low-$3.70s could set the stage for more upside. Early bouts of cold this month have helped drive prices up sharply since the 2/1-2-month low of $3.379 posted in early November.
But some traders remained skeptical about further upside, with stockpiles at comfortable levels and production flowing at a record-high pace.
Most traders agreed Thursday’s 45-billion-cubic-foot weekly natural gas inventory draw was bullish for prices, noting it came in well above the Reuters poll estimate of 33 bcf and also exceeded the highest estimate of 42 bcf in that poll.
The data reported by the U.S. Energy Information Administration (EIA) showed total domestic gas inventories stood at 3.789 trillion cubic feet, just 2.3 percent below last year’s record highs at that time, but still 0.4 percent above the five-year average.
Early withdrawal estimates for next week’s storage report ranged from 2 bcf to 4 bcf. That would compare with a 2 bcf drop during the same year-ago week and a five-year average decline of 15 bcf for that week.
Baker Hughes data on Friday showed the gas drilling rig count fell for the first time in three weeks, slipping by one to 369.
The rig count has risen in 13 of the last 22 weeks, stirring talk that new pipelines and processing plants may be encouraging producers to hook up more wells and pump more gas into an already well-supplied market.
The EIA expects U.S. gas production in 2013 to hit a record high for the third straight year, then climb again in 2014.
In the ICE cash market, prices for weekend delivery at Henry Hub , the benchmark supply point in Louisiana, climbed 9 cents to $3.77, with early differentials firming to about 2 cents over NYMEX from a 5-cent discount on Thursday.
Gas on the Transco pipeline at the New York citygate jumped $1.85 to $5.51 on the cold weekend outlook, while Chicago was 13 cents higher at $3.89.