Natural gas fell for the first time in three days as signs of sluggish demand snapped a 10 percent advance for the industrial and power-plant fuel. Gas had risen on speculation the recession may be easing and as drilling for the fuel tumbled 54 percent since September, which will cut supplies later this year. Demand from factories and power plants dropped as consumers bought fewer goods. “We’ve kind of been given a free run on the upside and I’m not surprised to see traders” sell futures, said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. Natural gas for June delivery fell 10.3 cents, or 2.8 percent, to $3.622 per million British thermal units at 10:14 a.m. on the New York Mercantile Exchange. Prices have dropped 35 percent this year. Industrial demand for gas will decline 7.4 percent this year as factories close and demand slumps for steel, chemicals and plastic, the Energy Department predicted in a report on April 14. Manufacturers accounted for 29 percent of demand in 2008. Gas also dropped after prices failed to break through the 50-day moving average, indicating the down trend for the fuel is still alive, said Tom Orr, research director at Weeden & Co., a brokerage in Greenwich, Connecticut. “This was a technical bounce within the context of an incredibly powerful move into commodities that took everything higher,” said Orr. “You see those moves for a day or two and then traders get a lot more discriminating. Gas will probably settle back into that $3.50 area.” Orr said a rally that began on March 19 and ended on March 24 pushed gas to the 50-day moving average, where it also failed. Since that rally, gas futures have declined 17 percent. “The major trend is down,” he said. “This has been a nice little bounce, but I think we saw the high yesterday.” Moving averages, which show the average of prices over a given time period, are used by technical analysts to help make buy and sell decisions.

Source