Oct. 1 (Bloomberg) -- Natural gas stockpiles in the U.S. rose to a record 3.589 trillion cubic feet as the worst recession since the 1930s curbed demand from chemical plants, carmakers and manufacturers across the country.

Inventories last week topped the prior record of 3.545 trillion set in November 2007, the Energy Department said today. With another month to go before supplies begin to drop as households and offices burn the fuel for heating, stockpiles may push the limits of U.S. storage capacity for the first time.

“In the near term, the gas market is oversupplied with a fair amount of question marks,” said Tom Orr, research director at brokerage Weeden & Co. in Greenwich, Connecticut. “There’s a healthy dose of skepticism. We had weak consumer confidence data and manufacturing data.”

Gas prices fell after the report was released. Natural gas for November delivery dropped 34.1 cents, or 7 percent, to $4.50 per million British thermal units at 12:26 p.m. on the New York Mercantile Exchange.

The futures have declined 42 percent in the past year and are down 67 percent from a 30-month high of $13.694 per million Btu reached on July 2, 2008.

“We’re still in a quagmire with the economy and we have huge supplies,” said Michael Rose, a director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida.

Gas Options

November 2009 $4 puts were the most active natural gas options today, based on electronic trading data as of 12:30 p.m. The options gained 6.2 cents to 15.5 cents each. The put options give buyers the right to sell gas futures.

Gas stockpiles rose 64 billion cubic feet in the week ended Sept. 25, the department said in a weekly report. Analysts in a Bloomberg survey expected an increase of 62 billion, based on 22 responses. The government began tracking weekly inventory changes in 1994.

U.S. manufacturing expanded last month at a slower pace than anticipated by economists, a report from the Institute for Supply Management showed. The factory gauge decreased to 52.6 from 52.9 in August, the Tempe-Arizona-based group said today. Fifty is the dividing line between expansion and contraction.

Inventories last week were 481 billion cubic feet above the typical level over the past five years for last week, according to the department.

Production Outlook

As demand dropped during the recession, output increased from new fields in Texas, Oklahoma and Louisiana. Gas production this year will average 59.1 billion cubic feet a day, up from 58.59 billion in 2008, the department’s Energy Information Administration said in its monthly Short-Term Energy Outlook on Sept. 9.

The Energy Department also predicted that consumption by industrial users, including factories, steel mills and chemical plants, will fall 9.8 percent in 2009.

Gas supplies this fall may approach peak U.S. storage capacity of 3.899 trillion cubic feet, according to Energy Department estimates.

“The record is sobering for the bulls,” said Phil Flynn, vice president of research at PFGBest, a Chicago-based brokerage. “The focus is going to be injections, which will show a record high, and that will bring some pressure on prices.”

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