By Reg Curren Dec. 1 (Bloomberg) -- Natural gas in New York fell on concern demand for energy will decline further as the U.S. recession deepens and economies in China and Europe slow. The recession is cutting demand in the U.S., where about 42 percent of natural gas consumption comes from industrial and commercial users. A report today showed that U.S. manufacturing contracted last month at the fastest pace in 26 years, echoing similar declines in Europe and China. “This is a bit of a reality check, with oil being down and the economic numbers being soft,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. Natural gas for January delivery fell 10.5 cents, or 1.6 percent, to $6.405 per million British thermal units at 10:33 a.m. on the New York Mercantile Exchange. Natural gas prices have dropped 14 percent this year. The Institute for Supply Management’s U.S. factory index dropped to 36.2 last month, the lowest level since 1982, from 38.9 in October. The ISM index was projected to drop to 37, according to the median of 61 economists’ forecasts in a Bloomberg News survey. A reading of 50 is the dividing line between expansion and contraction. The Tempe, Arizona-based ISM’s factory report was released at 10 a.m. New York time. Oil fell, dragging other energy commodities lower, after ministers from the Organization of Petroleum Exporting Counties, meeting in Cairo, delayed until Dec. 17 a decision on additional cuts to production. Crude oil for January delivery declined $3.55, or 6.5 percent, to $50.88 a barrel on the New York exchange. Oil has dropped 47 percent this year. Weather Reports The decline in oil prices pressured gas lower, overwhelming support from cold weather last week that ate into supplies, Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York, said in a note. “There is not much to break the market out of either side of the $6.40-to-$6.80 range,” he said. Normal temperatures are expected to dominate across the Midwest, where 72 percent of households rely on natural gas for heating, between Dec. 6 and Dec. 10, according to forecaster MDA Federal Inc.’s EarthSat Energy Weather of Rockville, Maryland. Higher temperatures in that region would probably reduce the amount of gas needed from storage to meet heating requirements. To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.

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