Natural gas futures fell the most in almost two months in New York after a government report showed a bigger-than-forecast increase in U.S. inventories. Stockpiles rose 103 billion cubic feet in the week ended May 15 to 2.116 trillion cubic feet, the Energy Department said. Analysts expected a gain of 95 billion. Supplies were 22 percent higher than the five-year average amid reduced fuel demand from factories and power plants during the recession. “This number surprised everyone it appears, so there’s a violent reaction,” said Brad Florer, a trader for Kottke Associates Inc., a commodity futures broker in Louisville, Kentucky. “This is just another sign that this economic turnaround we keep hearing about may not exactly be in place yet. Let’s call it a mirage, so far.” Natural gas for June delivery fell 31 cents, or 7.8 percent, to $3.66 per million British thermal units at 11:33 a.m. on the New York Mercantile Exchange, the biggest decline since March 27. Gas has declined 35 percent this year. All but one of the 22 analysts surveyed by Bloomberg predicted a stockpile gain of less than 100 billion cubic feet. The median of their estimates was 95 billion, and the five-year average rise for the week is 90 billion. Industrial consumption of gas is forecast to tumble 8 percent this year because of the lingering recession, the Energy Department said on May 12. Overall U.S. consumption is expected to contract 1.9 percent. Delayed Recovery Federal Reserve officials see “significant downside risks” to the outlook for the U.S. economy, according to the minutes of an April meeting released yesterday. Policy makers don’t anticipate a fuller recovery in the economy until 2011. A slower rebound from the recession would limit demand for natural gas. Factories and power-plants together consume 58 percent of U.S. output. “The recession seems to have settled in for an extended stay and there are clearly not going to be any successful quick fixes,” Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut, said before the report was released. “Industrial demand’s resurgence is not even on anyone’s horizon yet.” More Americans than expected filed claims for unemployment insurance last week, the Labor Department said today. The total number of people collecting benefits rose to 6.66 million, the 16th consecutive weekly record. Gas has tumbled 73 percent since reaching a 2008 high of $13.694 per million Btu on July 2, as factories were shut because of sliding consumer demand. The U.S. economy contracted 6.1 percent in the first quarter and 6.3 percent in the final three months of 2008, cutting industrial gas consumption. The economy is contracting at a 1.1 percent annual pace in the current quarter, according to estimates from Macroeconomic Advisers LLC.

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