--U.S. gas declines, nearing $2/MMBtu on rising supplies --Natural gas for May delivery recently 1.9% lower at $2.086/MMBtu --Production holds up despite price declines By Jerry A. DiColo Of Natural gas futures fell Monday, slumping toward $2/MMBtu and fresh decade lows as investors see no end to rising U.S. gas supplies. Natural gas for May delivery fell 4.0 cents, or 1.9%, to recently trade at $2.086 a million British thermal unit on the New York Mercantile Exchange. The benchmark contract had fallen as low as $2.069 in earlier trading. Futures aimed for a sixth-straight session of declines as U.S. supplies show a massive glut. Last week, the Energy Department said inventories rose to 2.437 trillion cubic feet, 58% higher than the five-year average, as a mild winter reduced the need for gas-fired heating and gas production surges. Late Friday, Baker-Hughes' count of natural-gas-production rigs rose for the first time in three months, signalling that output is continuing even with prices at multi-year lows. U.S. gas production hit an all-time high in January, the latest month with data available. "The reality here is we have this huge supply overhang," said Matt Smith, an analyst at Summit Energy. "It seems inevitable that we're going to get a one (dollar) handle on this thing." The U.S. gas market is entering the so-called shoulder season, the period of mild temperatures where consumers turn off heating but don't yet need air conditioning. Gas stockpiles are expected to continue rising through the next few months as demand wanes. In the physical market, natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $1.8425/MMBtu, according to IntercontinentalExchange, compared with Friday's average of $2.0044/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $2.0050/MMBtu, down from $2.1610/MMBtu.

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