By Reg Curren Nov. 12 (Bloomberg) -- Natural gas in New York declined for a second day, following crude oil lower, on concern a slowing economy will weigh on energy demand. About 42 percent of U.S. gas consumption comes from industrial and commercial users. Oil dropped as much as 3.9 percent after Nobuo Tanaka, executive director of the International Energy Agency, said it was ``more than likely'' the IEA will reduce its global oil demand growth estimate. ``This credit crisis hangs over everybody like a guillotine,'' said Michael Rose, a director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. ``You have chaotic markets. There comes a point in time where it's prudent to put your hands in your pockets'' and stop trading. Natural gas for December delivery fell 12.4 cents, or 1.9 percent, to $6.581 per million British thermal units at 10:24 a.m. on the New York Mercantile Exchange. Prices dropped 7.5 percent yesterday and have declined 12 percent this year. Crude oil for December delivery fell $1.74, or 2.9 percent, to $57.59 a barrel on the exchange and touched $57.04, the lowest since March 20, 2007. Gas stockpiles probably gained 50 billion cubic feet in the week ended Nov. 7, according to the median of five analyst estimates compiled by Bloomberg. The average change for the week over the past five years is a gain of 23 billion cubic feet. Falling crude prices and increasing supplies of natural gas provide people with additional reasons to sell, Rose said. Stockpile Gain Gas inventories reached 3.405 trillion cubic feet in the week ended Oct. 31, the Energy Department said on Nov. 6. Supplies were 2.3 percent above the five-year average. ``With the economy expected to shrink further, unless an early blast of very cold weather appears, prices are set to challenge $6,'' Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York, said in a note. Higher temperatures last week allowed supplies to gain more than average for this time of year as heating demand was about 40 percent below average, according to Weather Derivatives of Belton, Missouri. The supply gain will probably represent the peak of storage for the coming cold-weather season as lower temperatures will prompt withdrawals later this month, Weather Derivatives said in a report this week. To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.

Source