By Reg Curren

Dec. 8 (Bloomberg) -- Natural gas futures in New York fell to a 15-month low after Dow Chemical Co., the largest U.S. chemical maker, said it plans to shut plants and cut jobs because of declining sales.

“Dow is a big consumer of gas,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “It seems natural gas is focusing on the fact industrial demand is so weak.”

Natural gas was the only energy futures market to decline today. Crude oil surged on a plan from President-elect Barack Obama to start the biggest U.S. public works program in about 50 years to revive the economy.

Natural gas for January delivery fell 17.6 cents, or 3.1 percent, to settle at $5.566 per million British thermal units at 3:27 p.m. on the New York Mercantile Exchange. The settlement is the lowest since futures prices reached $5.501 on Sept. 7, 2007. Gas futures dropped 12 percent last week and are down 26 percent this year.

Dow said today it will close 20 plants and temporarily idle 180 others. Dow uses gas and petroleum to power plants and as raw materials for plastics and chemicals.

The chemical industry accounted for 6.2 percent of total U.S. energy consumption in 2007, according to the American Chemistry Council. Gas represents 33 percent of the industry’s demand for fuel and feedstocks, according to the association’s Web site.

“Whenever you have industrials closing down, that’s always going to put natural gas behind the eight ball,” said Michael Rose, a director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “Industrials are a big user of natural gas.”

Oil Prices, Weather

Crude oil for January delivery rose $2.90, or 7.1 percent, to $43.71 a barrel on the New York exchange. It was the first increase in seven days. Oil is down 70 percent from a record $147.27 in July. Gasoline and heating-oil futures also gained.

Higher temperatures forecast for next week also pressured natural gas lower, said Lisa Zembrodt, an analyst at Summit Energy Services Inc. in Louisville, Kentucky.

“There are above-normal temperatures forecast for the East Coast and we need colder weather to eat up supplies,” she said. “Dow is confirmation of the bearish sentiment” on the economy and industrial demand.

Demand for gas from industrial consumers was about 1 billion cubic feet a day, or 6.3 percent, lower in November than a year earlier, Cameron Horwitz, an analyst at Sun Trust Robinson Humphrey in Houston, said in a note on Dec. 5.

About 42 percent of U.S. gas consumption comes from industrial and commercial users and another 30 percent is used in power generation.

Slumping Demand

Industrial production in such areas as steel and chemicals is slumping as the U.S. economy sags. Supplies of gas at the end of November were 69 billion cubic feet, or 2.1 percent, above the five-year average, the Energy Department said Dec. 4.

Traders are also reluctant to buy gas futures after having seen a series of “false starts” on moves higher in the past month, Rose said.

“Natural gas has been stopped and started about half a dozen times to the up side and traders are tired of it,” he said. “Traders are waiting for gas to show them” a consistent move higher.

Gas gained 6 percent in trading between Nov. 3 and Nov. 5, reaching $7.249 per million Btu. In the next two trading sessions, it declined 6.8 percent. The futures repeated the pattern the following week, surging 7.3 percent on Nov. 10 to $7.248 per million Btu and then declining to $6.312 by Nov. 14.

To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net