Natural gas futures fell to the lowest in eight weeks amid concern demand will decline as the U.S. economy slows.

Prices paid by consumers jumped 1.1 percent in June, the most since 2005 on spiraling costs for fuel and food. Spending will fall because homeowners can no longer use rising real estate values to borrow cash, $837.5 billion in 2006, according to a report by former Federal Reserve Chairman Alan Greenspan and James Kennedy.

``The market is digesting the Fed policy from yesterday,'' said Michael Rose, trading director at Angus Jackson Inc. in Fort Lauderdale, Florida. ``There is no fundamental reason the market goes higher from here unless you get a catalyst from a storm.''

Natural gas for August delivery fell 7.9 cents, or 0.7 percent, to settle at $11.398 per million British thermal units at 3:05 p.m. on the New York Mercantile Exchange, the lowest price since May 20, when it settled at $11.365. Gas fell as low as $11.113 today. Futures rose to $13.577 per million Btu on July 3, the highest closing price since Dec. 21, 2005, and are 52 percent higher this year.

``I think we got way ahead of ourselves on the rally into the $13 range,'' said Ed Kennedy, a trader with Commercial Brokerage Corp. in Miami.

Federal Reserve Chairman Ben S. Bernanke yesterday said risks to U.S. growth have increased and issued a warning on inflation in semiannual testimony on the economy to the Senate Banking Committee.

The dollar traded at $1.5816 per euro at 3:50 p.m. in New York, compared with $1.5911 yesterday, when it declined to a record low of $1.6038.

Industrial, commercial and power-generation needs account for about 78 percent of gas use, according to the U.S. Energy Department.

Industrial Users

``We are delighted prices have fallen'' said Paul Cicio, president of Washington-based Industrial Energy Consumers of America, a non-profit national industry trade association promoting the interests of manufacturing companies. ``Based on supply and demand fundamentals there was no justification for natural gas to rise to mid $13 levels,'' he said. ``It is still premature to say that this speculative bubble has burst but we are grateful prices are lower.''

Senate Majority Leader Harry Reid and Senators Richard Durbin and Charles Schumer today proposed legislation to limit speculation in energy futures markets.

The bill would require the Commodity Futures Trading Commission to apply limits on energy market speculation ``that is not legitimate hedge trading,'' according to a copy of the measure.

Crude Falls

Crude oil for August delivery slipped $4.14, or 3 percent, to settle at $134.60 a barrel in New York. Oil fell after a U.S. government report showed an unexpected increase in inventories. Crude yesterday fell for the first time in a week, dropping $6.44. Futures slid to as low as $132 a barrel today and are 40 percent higher this year.

``Crude being lower helps natural gas look less to oil for direction and more to its own fundamentals,'' said Lisa Zembrodt, a commodity analyst at Summit Energy Services Inc. in Louisville, Kentucky.

Supplies rose 2.95 million barrels to 296.9 million barrels in the week ended July 11, the department said today in its weekly report. Inventories were forecast to drop 2.2 million barrels, according to the median of analyst estimates in a Bloomberg News survey.

When energy prices fall ``there is a relative improvement in our competitiveness,'' said Cicio. Lower costs ``will improve the profitability of manufacturing companies and increase imports and reduce inflation.''

Hurricane Season

The U.S. National Hurricane Center said today that a low- pressure system in the Atlantic Ocean ``has become better organized and a tropical depression could be forming,'' according to an advisory at 10:45 a.m. New York time. The U.S. Air Force will investigate the system this afternoon to see if a tropical cyclone has formed.

Tropical depressions can strengthen into a tropical storms and hurricanes. Such storms that enter the Gulf of Mexico typically threaten natural gas and oil output from offshore production platforms.

``There are two systems out there in the Atlantic both of which they are calling for development,'' said Kennedy, a trader with Commercial Brokerage Corp. in Miami. ``The hurricane season is just getting going.''

Gas in storage gained 88 billion cubic feet in the week ended July 11, according to the median of 15 analyst estimates compiled by Bloomberg News. During the same week last year, supplies increased 71 billion cubic feet. Inventories rose to a record 3.545 in November 2007.

The Energy Department will release its weekly supply report tomorrow at 10:35 a.m. in Washington.