June 19 (Bloomberg) -- Natural gas fell in New York on concern demand for energy will stay weak as the economy attempts to recover from the worst recession in five decades.
Gas declined along with crude oil and other energy commodities amid weak fuel demand. Factories and chemical and steelmakers account for about 29 percent of U.S. natural gas demand, according to the Energy Department. Crude, gasoline and commodities including copper had increased in earlier trading.
“They tried to get gas going on the upside earlier and now they’re trying on the downside with crude falling off,” said Carl Neill, an energy analyst at Risk Management Inc. in Chicago.
Natural gas for July delivery declined 6.1 cents, or 1.5 percent, to settle at $4.032 per million British thermal units at 2:53 p.m. on the New York Mercantile Exchange. Natural gas rose 4.5 percent this week and is down 28 percent this year.
Crude oil for July delivery declined $1.82, or 2.6 percent, to $69.55 a barrel on the exchange. Oil has climbed 56 percent this year.
The number of gas rigs working in the U.S. rose for the first time in 30 weeks, gaining seven, or 1 percent, to 692, according to Baker Hughes Inc. The count is down 57 percent from a peak of 1,606 on Sept. 12.
The Energy Department has forecast that gas supplies would fall 1.1 percent in 2009 from a year earlier on a declining rig count and 2.6 percent in 2010.
Inventories of the power-plant and industrial fuel have swelled as mild weather and the recession pinched demand.
Gas Supplies
Gas stockpiles have gained an average of 80 billion cubic feet since the injection season began in early April, putting storage on a course to reach near 4 trillion cubic feet to start the winter demand period, according to Energy Department data. Stockpiles at that level would be 13 percent above the record 3.545 trillion in storage on Nov. 2, 2007.
“There’s a ton of gas,” said Neill. “We could be at 3.9 trillion cubic feet by the end of the summer.”
Supplies gained 114 billion cubic feet in the week ended June 12 to 2.557 trillion cubic feet, the Energy Department said yesterday.
“Another triple-digit addition is expected next week and with storage approaching capacity, gas will either have to come to market or remain in the ground and should keep prices in check,” John Kilduff, senior vice president of energy at MF Global in New York, said in a note to clients.
Industrial demand will fall 8 percent this year because of the recession, the department said in a report on June 9.
Mild weather in much of the U.S. has limited demand for electricity from gas-fired plants to run air conditioners. Inventories are 23 percent above the five-year average level for this time of year. About 29 percent of U.S. gas consumption comes from power generators.
