June 30 (Bloomberg) -- Natural gas production in April fell 0.2 percent from the previous month, according to a report from the U.S. Energy Department.

Gas output in the lower 48 states declined to 63.37 billion cubic feet a day in April from a revised 63.49 billion in March, the Monthly Natural Gas Production Report showed. March production fell 0.1 percent from February.

Production of the industrial and power-plant fuel will fall 1.1 percent in 2009 from a year earlier and 2.6 percent in 2010 from 2009, the Energy Department said in an outlook issued on June 9. The number of gas drilling rigs operating in the U.S. has dropped 57 percent since September as prices have declined by more than 70 percent from the 2008 high.

“It’s strictly a function of price and that’s a function of the falloff in demand that we’ve seen,” said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston. “It’s the operator’s response to these prices. It’s uneconomical at these levels.”

Natural gas for August delivery slid 11.1 cents, or 2.8 percent, to $3.833 per million British thermal units at 1:18 p.m. on the New York Mercantile Exchange. Gas is down 72 percent from the 2008 high of $13.694 per million Btu on July 2.

Inventories of natural gas rose to 2.651 trillion cubic feet in the week ended June 19, the Energy Department said on June 25.

Stockpiles may reach a record before demand picks up with colder weather. The current record to start the heating season, when demand outstrips production, is 3.545 trillion cubic feet reached on Nov. 2, 2007.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net.

Last Updated: June 30, 2009 14:01 EDT