Natural gas declined for a third day in New York on expectations of a prolonged slump in demand for the industrial fuel as the recession forces consumers to reduce spending on goods. Gas tumbled after analysts forecast the economy will expand at a slower pace and not return to the levels seen before the recession started in December 2007. Overall U.S. gas consumption will probably contract 1.9 percent this year on reduced demand from factories, the Energy Department said earlier this month. “This may be an L-shaped bottom, where you go down, level off and stay there and not get a recovery at all,” said Tom Orr, director of research at Weeden & Co., a brokerage in Greenwich, Connecticut. “I don’t see the industrial gas situation getting any better and the low of $3.155 from last month may be back in play.” Natural gas for June delivery fell 2.8 cents, or 0.8 percent, to $3.487 per million British thermal units at 11:29 a.m. on the New York Mercantile Exchange. The contract earlier reached as low as $3.388. Gas has dropped 38 percent this year. Gas pared steeper declines after a government report showed confidence among U.S. consumers reached the highest level since September. The Conference Board’s sentiment index surged to 54.9, higher than forecast and the biggest gain since April 2003, the New York-based research group said today. Americans may have to get used to economic growth of 2 percent a year or less as the recession and financial crisis combined to crush consumer confidence, Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the biggest bond fund manager, said today. Growth Rates In the 30 years before the recession began, the average growth rate was 2.9 percent. Over the past 15 years, it was 3 percent. The last time U.S. gross domestic product grew at an annual rate of under 2 percent over a decade was the 1930s, when it expanded at an average 1.3 percent. U.S. gas supplies for the week ended May 15 were 22 percent higher than the five-year average as industrial users trimmed purchases, an Energy Department report showed on May 21. Factory and power-plant consumption together accounts for 58 percent of U.S. gas demand. Industrial gas use may tumble 8 percent this year because of the recession, the Energy Department said on May 12. Mild weather, which limits electricity demand from gas- fired generators needed to run air conditioners, and weak demand from factories probably allowed gas stockpiles to rise 112 billion cubic feet last week, Martin King, an analyst at Calgary-based brokerage FirstEnergy Capital Corp., said in a note to investors today. Supply Report The average inventory change for the week over the past five years is a gain of 91 billion cubic feet, according to the Energy Department, which is scheduled to release its weekly supply update at 10:30 a.m. on May 28 in Washington. “Natural gas storage injections keep creeping ahead of our cumulative forecast estimates for each month,” King said. “May storage injections could very well top 450 billion cubic feet. It is ahead of our forecast for just over 400 billion, pushing the end of October storage beyond our 3.725 trillion estimate.” Normal temperatures are forecast for the eastern two- thirds of the U.S. over the next two weeks, according to MDA Federal Inc.’s EarthSat Energy Weather.

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