By Reg Curren Dec. 16 (Bloomberg) -- Natural gas futures fell for the first time in three days in New York on speculation supplies will be ample to meet U.S. heating needs this winter. Inventories of the fuel were 513 billion cubic feet, or 16 percent, above the five-year average in the week ended Dec. 4, the Energy Department said on Dec. 10. Tomorrow’s report may show supplies fell 176 billion cubic feet last week, which would drop the surplus to 15 percent, based on the median of 17 analyst estimates compiled by Bloomberg. “We’re still going to be way above average,” said Tom Orr, director of research at brokerage Weeden & Co. in Greenwich, Connecticut. “I don’t think we should be up this high as gas has already largely factored in the storage decline and cold weather.” Natural gas for January delivery declined 5.2 cents, or 0.9 percent, to $5.471 per million British thermal units at 11:15 a.m. on the New York Mercantile Exchange. Cold weather, which boosted demand last week, will last until Dec. 30 and stretch from Texas to New York, according to the MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland. “With the estimates looking like they may be around a 200 billion draw, that’s going to get the attention of the market,” said John Kilduff, a partner at Round Earth Capital, a New York- based hedge fund that focuses on food and energy-commodity investments. “We’re still vulnerable to some disappointment, so we’re going to need validation from that withdrawal number” to keep prices higher. Prices will “chop around” their current level until traders see the inventory report, Kilduff said. High Supplies Inventories declined 64 billion cubic feet in the week ended Dec. 4, falling to 3.773 trillion cubic feet, the department said last week. Supplies were 472 billion higher than a year earlier. Lower temperatures and speculation of a storage decline above typical amounts have helped to lift prices in recent days, said Michael Fitzpatrick, vice president of energy at MF Global in New York. “The rally may well have run its course already,” he said. “Even an extraordinary pull this and in subsequent weeks will still leave a significant amount in the ground to contend with in the spring.” Gas stockpiles rose to a record 3.837 trillion cubic feet in the week ended Nov. 27, according to the department. Inventory declines have averaged about 2 trillion cubic feet in each of the past three winters. A similar drop this season would leave supplies at about 1.8 trillion cubic feet in April, or about 300 billion higher than average for that time of year. To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net

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