Oct. 6 (Bloomberg) -- Natural gas in New York fell for a third day to its lowest price in almost a year as investors fled commodities on concern a widening financial crisis will further slow the economy, cutting energy demand.

A declining economy would reduce demand from commercial and industrial users of gas, which accounted for 9.64 trillion cubic feet, or 42 percent, of consumption in the U.S. in 2007. Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, tumbled 10 percent last week, the most since at least 1956, amid the mounting credit crisis.

``The first thing people throw out of their portfolios is risk capital and that is commodities,'' said Michael Rose, a director of trading at Angus Jackson Inc., a futures brokerage in Fort Lauderdale, Florida.

Natural gas for November delivery fell 52.3 cents, or 7.1 percent, the biggest decline in a month, to settle at $6.835 per million British thermal units at 2:56 p.m. on the New York Mercantile Exchange. Gas was last below $7 per million Btu on Dec. 27 and hasn't been this low since Oct. 23, 2007. The futures have shed 50 percent since reaching a 30-month closing high of $13.577 per million Btu on July 3.

``We all knew there had to be a gigantic flush before this bear was done,'' Brad Florer, a trader at Kottke Associates Inc. in Louisville, Kentucky, said. ``Commodities are in a tailspin because people believe the global expansion is dead for now.''

Other energy futures, including crude oil and heating oil, tumbled. Crude fell as the German government pledged $68 billion to bail out Hypo Real Estate Holding AG, suggesting a broader crisis might cripple world markets.

Oil's Decline

Oil for November delivery fell $6.07, or 6.5 percent, to $87.81 a barrel. Earlier it declined to $87.80, the lowest since Feb. 7.

``People just want out of commodities and crude is down,'' taking gas lower, said Kyle Cooper, an analyst at IAF Advisors in Houston.

Inventories of natural gas gained 87 billion cubic feet in the week ended Sept. 26 to 3.11 trillion cubic feet, the Energy Department said Oct. 2. Analysts had forecast a 73 billion- cubic-foot advance.

``Supplies are looking very adequate,'' said Cooper. ``With the gas that is already in storage and the significant increase in production,'' prices may fall.

Five-Year Average

The increase kept supplies on a pace to exceed the five- year average of 3.327 trillion cubic feet at next month's start of the cold-weather season across much of the U.S. Stockpiles were 50 billion cubic feet higher than average for this time of year, up from 35 billion in the previous week's report.

In addition to higher storage, natural gas output is forecast to expand 8 percent in 2008 from a year earlier, boosting supplies, according to the Energy Department.

Through the first seven months of this year, gross production is 15.2 trillion cubic feet compared with 14.1 trillion for the same period in 2007, the department said. Consumption has risen only 4 percent from a year earlier.

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

Last Updated: October 6, 2008 15:49 EDT