June 18 (Bloomberg) -- Natural gas declined in New York after a government report showed that U.S. stockpiles last week advanced more than analysts expected. Inventories gained 114 billion cubic feet in the week ended June 12 to 2.557 trillion cubic feet, the Energy Department said. Analysts expected a gain of 105 billion. Supplies were 23 percent higher than the five-year average compared with a 22 percent surplus in last week’s report. The average increase for the week over the past five years is 80 billion cubic feet. “The bottom line is there’s a lot of supply and not much demand,” Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York, said in a note to clients. “Gas should be closer to $2 than $4. I’ve been around commodity markets for 30 years and invariably fundamentals have to win out.” Natural gas for July delivery fell 16.8 cents, or 3.9 percent, to $4.085 per million British thermal units at 11:01 a.m. on the New York Mercantile Exchange. The contract was trading at $4.249 before the report was released at 10:30 a.m. Prices have declined 27 percent this year. Consumption of gas at factories will tumble 8 percent this year because of the recession, the Energy Department said on June 9 in a monthly report. Overall U.S. consumption is expected to contract 2.2 percent. “Anything above 100 billion cubic feet can’t be construed as bullish as far as fundamentals go,” Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said before the report. “You’re starting to hear the tremor that we could exit the injection season with over 4 trillion cubic feet” in storage. McGillian had forecast an inventory increase of 112 billion cubic feet. Inventories at 4 trillion cubic feet would be 13 percent above the record 3.545 trillion in storage on Nov. 2, 2007.

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