Natural gas futures fell in New York on forecasts of higher temperatures next week across the eastern half of the U.S., reducing demand for the heating fuel. Above-normal temperatures are expected to push into the Midwest and Northeast starting Feb. 8 and persist for much of the week, according to forecaster MDA Federal Inc.’s EarthSat Energy Weather of Rockville, Maryland. Residential demand represents 20 percent of gas consumption in the U.S. “We’re back to traders looking at there’s not enough winter left to soak up supplies and there’s nothing happening in industrial demand yet,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. Natural gas for March delivery fell 13.5 cents, or 3 percent, to $4.42 per million British thermal units at 11:44 a.m. on the New York Mercantile Exchange. The heating and industrial fuel is down 21 percent this year and 68 percent since a 2008 high of $13.694 per million Btu reached on July 2. Inventories of gas declined 186 billion cubic feet in the week ended Jan. 23 to 2.374 trillion cubic feet, the U.S. Energy Department said on Jan. 29. Supplies were 1.2 percent above the five-year average. The next report is due Feb. 5. Gas will probably bounce around in the coming weeks as buyers and traders attempt to determine whether prices can break below the intraday low of $4.05 per million Btu reached on Sept. 27, 2006, Beutel said. Gas declined to $4.28 yesterday before rebounding to close higher. “We’re going to be in for a period of more price volatility rather than less,” Beutel said. Slowing Demand The peak heating-demand period starts to slow later this month and by early April gas companies and utilities will be replenishing stockpiles with fuel for use next winter. Rising supplies typically put pressure on prices to move lower. “With winter running out, the opportunities to push prices up diminish,” Michael Fitzpatrick, vice president for energy at MF Global Ltd. in New York, said in a note today. Consumption by factories, chemical makers and other big industrial users like steel plants fell in November from a year earlier, according to an Energy Department report on Jan. 30. Industrial use in November was 18 billion cubic feet a day, down 4.3 percent from a year earlier, the department said. Industrial usage accounted for 29 percent of U.S. demand in 2007. Dow Chemical Co., the largest U.S. chemical maker, posted its first loss in six years today as the recession slashed demand for plastics. The Midland, Michigan-based company is closing factories and cutting jobs. Sales volumes and prices plunged for basic plastics and chemicals, prompting Dow to reduce factory operating rates to the lowest in more than 25 years. Sales dropped 23 percent to $10.9 billion. Dow ran its plants at 44 percent of capacity in December, the lowest ever, and at 64 percent for the full quarter. Industrial demand for gas may contract by 7 percent in 2009, Ronald Barone, an analyst with UBS AG in New York, said in a report last month. The chemical industry accounts for 36 percent of industrial demand for gas, he said.

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