May 12 (Bloomberg) -- Natural gas futures rose to the highest price in three months on speculation demand for energy will begin to rebound as the recession eases.

The economy will return to a growth rate of 0.5 percent in the third quarter and gain strength in the final three months of the year, expanding 1.8 percent, according to the median of 61 forecasts in a Bloomberg News survey of analysts. A recovery would spur gas demand from factories and power plants, which account for 58 percent of U.S. consumption.

“We’ve gone through the worst of it and the industrial sector has turned the corner,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “Much of the contraction in the economy has been inventory liquidation, which means the industrial sector at some point will be forced to replenish them.”

Natural gas for June delivery rose 14.7 cents, or 3.4 percent, to settle at $4.449 million British thermal units at 3:20 p.m. on the New York Mercantile Exchange, the highest close since Feb. 13. Gas has gained 41 percent since touching $3.155 on April 27, its lowest price since September 2002.

“We put in a bottom at $3.15 and from here the move to $5 for gas is within days,” said Jarvis, who on May 4 forecast natural gas would break through $4.

Crude oil also gained on signs of rising demand, after China boosted crude imports by 14 percent in April. Oil for June delivery advanced 35 cents, or 0.6 percent, to $58.85 a barrel after touching $60 for the first time in six months.

Employment Report

A U.S. Labor Department report last week showed employers cut fewer jobs than expected in April, adding to speculation that the economic slump is easing and demand for gas will recover. Consumer confidence reached a five-month high in April, the Conference Board said on April 28.

Weekly production of raw steel in the seven days ended May 9 rose to 1.02 million tons, up 28 percent from a 2008 low on Dec. 29, according to the American Iron and Steel Institute. Compared with a year earlier, production was down 53 percent, the institute said yesterday.

“There’s more of a macroeconomic focus on the potential for greater demand as economies open back up,” said George Ellis, a director in the energy derivatives group at BMO Capital Markets in New York. “There’s a greater commodity move being influenced by financial markets and the stimulus from Washington, so markets are ignoring fundamentals.”

Gas has fallen 68 percent since reaching a 2008 high of $13.694 per million Btu on July 2 as plants were idled because of sliding demand. The U.S. economy shrank 6.1 percent in the first quarter and 6.3 percent in the final three months of 2008, cutting industrial gas consumption.

Industrial Demand

The slide in factory needs for gas will cut industrial use by about 8 percent this year, a government report today showed. Total usage will fall 1.9 percent.

Gas production is expected to average 57.9 billion cubic feet a day in 2009, down from an estimate of 58.4 billion in the April forecast, the report from the department’s Energy Information Administration showed.

Reduced drilling will cut production 1 percent in 2009 and 2.8 percent next year, the agency said. The number of rigs drilling for natural gas has dropped 55 percent from a peak of 1,606 in September, according to Baker Hughes Inc.

Declines in U.S. production may filled by a projected increase in imports of liquefied natural gas.

LNG Imports

LNG shipments may rise 43 percent this year as overseas plants begin operations and demand from Europe and Asia declines, the Energy Department report showed. Imports may reach 500 billion cubic feet, up from 350 billion in 2008.

“As the economy begins to recover, there’s going to be a significant demand for natural gas in the U.S., both from unconventional sources and from a resumption of LNG imports,” Exxon Mobil Corp. Chief Executive Officer Rex Tillerson said today at the opening of the U.K.’s South Hook gas terminal. “There will be an important role for LNG in the U.S.”

LNG is gas that is cooled to a liquid for transport by ship to markets not connected by pipelines. The fuel is received at import terminals and converted back to a gaseous form so it can be piped to users.

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

Last Updated: May 12, 2009 16:17 EDT