Natural gas futures declined in New York on skepticism that the economy is recovering fast enough to reduce a glut of the factory and power-plant fuel. Industrial demand for gas is forecast to drop 8 percent this year because of the recession, according to the Energy Department. U.S. stockpiles, which are about 22 percent higher than the five-year average, may rise to an all-time high before the winter, when heating-fuel demand whittles supplies. “We’re more than 20 percent above the five-year average and there’s talk that we can reach the record,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Unless you see real verifiable signs that demand will kick in, you’re going to continue to see” natural gas fall. Natural gas for July delivery dropped 7.9 cents, or 1.9 percent, to $4.17 per million British thermal units at 9:43 a.m. on the New York Mercantile Exchange. Futures have declined 26 percent this year. Gas demand may not pick up for at least the next six months, said Stephen Briggs, a partner at Intermarket Management LLC in Verona, New Jersey, a brokerage and energy risk- management firm. “We’re still having layoffs. The economy is still not great. I don’t see anything changing.” Futures also declined a day after surging 11 percent, the biggest one-day gain since March 19. “Most of the markets are taking a breath here,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “Right now you’re seeing profits locked in from yesterday. It’s not atypical.”

Source