Natural gas fell to the lowest in more than two years in New York as demand for the industrial and heating fuel slumps in a deepening recession.

Weak factory demand blunted storage withdrawals during frigid weather last week. A supply decline of 176 billion cubic feet reported by the U.S. Energy Department today was about 23 percent less that it would have been in a healthier economy, said Scott Speaker, JPMorgan Chase & Co.’s natural gas strategist.

Natural gas for February delivery fell 17.7 cents, or 3.8 percent, to $4.504 per million British thermal units at 11:11 a.m. on the New York Mercantile Exchange. Prices touched $4.44, the lowest since Sept. 27, 2006. Gas has dropped 20 percent this year and is down 67 percent from the 2008 high of $13.694 reached on July 2.

Supplies fell to 2.56 trillion cubic feet in the week ended Jan. 16, 1.2 percent above the five-year average, the Energy Department said.

(Bloomberg.com)