Natural gas futures continued their weeklong decline Thursday as worries over slumping demand prompted investors to sell a wide range of commodities, erasing the gas contract's morning pop following a slimmer-than-expected inventory build.

The Federal Reserve's dour economic prognosis on Wednesday prompted many investors to avoid relatively riskier assets, pushing a broad swath of commodities futures into the red. Natural-gas futures avoided their typically maverick behavior to join the selloff.

"All markets are in turmoil and the attitude is sell first and ask questions later," analyst Jay Levine wrote in a note to clients.

Natural gas for October delivery settled down 2.5 cents, or 0.7%, at $3.705 a million British thermal units on the New York Mercantile Exchange. The benchmark contract already hit a 10-month low on Wednesday.

The macroeconomic concerns overshadowed a smaller-than-expected increase to last week's natural gas inventories, which grew by 89 billion cubic feet during the week ended Sept. 16, according to the Energy Information Administration. Analysts on average expected a 91-bcf injection, according to a Dow Jones Newswires survey.

The data indicated supplies ended the week slightly lower than expected, but the build still topped the five-year average injection of 72 bcf. Surging production has helped depress gas prices for the past two years, and demand is unlikely to swing significantly in the coming months as mild weather prompts U.S. residents to turn off their air conditioning units, reducing demand for power from natural-gas fired plants.

"You almost couldn't have had a good enough injection, within reason, to turn the market up," Morgan Keegan managing director Roger Read said.

Fears of a slowdown in the U.S. economy have attracted renewed attention to the gas market's bearish fundamentals, Read said, including potentially weak demand from chemical makers, manufacturing plants and other industrial customers.

The fact that a surprisingly low storage build failed to sustain a rally "just typifies the general weakness in the market," Summit Energy analyst Matt Smith said.

 
   FUTURES        SETTLEMENT      NET CHANGE 
   Nymex Oct      $3.705          -2.5c 
   Nymex Nov      $3.782          -3.8c 
   Nymex Dec      $4.045          -5.4c 
 
   CASH HUB       RANGE           PREVIOUS DAY 
   Henry Hub      $3.6875-$3.78   $3.7625-$3.83 
   Transco 65     $3.7025-$3.735  $3.755-$3.79 
   Tex East M3    $3.895-$3.9475  $3.96-$4.02 
   Transco Z6     $3.925-$3.95    $4.005-$4.04 
   SoCal          $3.93-$4.02     $4.00-$4.03 
   El Paso Perm   $3.55-$3.65     $3.63-$3.72 
   El Paso SJ     $3.54-$3.61     $3.59-$3.72 
   Waha           $3.58-$3.70     $3.64-$3.69 
   Katy           $3.615-$3.70    $3.695-$3.73

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; andrew.fitzgerald@dowjones.com