NEW YORK (

TheStreet

) -- Natural gas futures on the Nymex hit an 11-month high Thursday following a bigger-than-expected decline in supply last week, as crude futures extended their losing streak.

Natural gas inventories fell by 64 billion cubic feet to 3.77 trillion cubic feet for the week ended Dec. 4, the Energy Information Administration said. Analysts had forecast a withdrawal between 44 billion and 48 billion cubic feet, according to a poll by Platts. Still, the glut in storage continues, as natural gas stockpiles remain 14.3% higher than a year ago and 15.7% higher than the five-year average.

The January natural gas contract soared to an 11-month high $5.347 before settling the session 40 cents, or 8.2% higher, at $5.298 per million British thermal units. Forecasters expect cold weather in key portions of the country to continue in the coming days.

Major natural gas names rose in kind, with

Chesapeake Energy

(CHK) - Get Report

,

Devon Energy

(DVN) - Get Report

and

Anadarko Petroleum

(APC) - Get Report

closing up by 3.3%, 0.9% and 2%, respectively.

The

U.S. Natural Gas Fund

(UNG) - Get Report

surged 7% to finish at $9.75.

Crude oil for January delivery shed 13 cents, or 0.2%, during the session before settling at $70.54 a barrel. The contract slipped below the psychologically significant $70 barrier at its lowest point of the day, at $69.81 a barrel. On Wednesday, the EIA reported a

draw down in oil stocks. But the government also reported a surprise build in both gasoline and distillate fuel stocks as weak oil demand--up by just 25,000 barrels a day from the prior week--translated into higher supplies of gasoline and middle distillates.

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"At 3.32 million barrels a day, distillate demand is down almost 20% year-over-year and is an incredibly weak reading, showcasing the lack of cold weather and no turnaround yet in trucking activity in the U.S.," said Barclays Capital analyst Amrita Sen. "Until that transpires, crude prices will remain capped on the upside, waiting for the dislocated part of the barrel to correct itself. That said, we see limited downside for prices from current levels."

"Only a long, deep cold blast along the Atlantic Coast could start to erode the inventory surplus in middle distillates, but even then, stocks of ultra low sulfur diesel remain exceptionally high, reflecting the weak state of the U.S. economy," said Linda Rafield, a Platts senior oil analyst.

Oil prices weren't helped by a slightly stronger dollar. The dollar index was last up by 0.8%.

Oil-related stocks ended the day higher, as the NYSE Arca Oil Index added 0.6%. Shares of oil refiner

Sunoco

(SUN) - Get Report

recovered from a Wednesday selloff triggered by a Fitch Ratings downgrade. Shares closed Thursday's session 1.8% higher at $26.17.

Shares of

Hess

(HES) - Get Report

finished the day up by $1.28, or 2.3%, at $55.91 on the heels of announcing plans to sell $750 million in notes.

But it was the service sector segment, in particular, that was helping lead overall gainers today, as the Philadelphia Oil Service Sector Index rose 1.6%. Shares of

National-Oilwell Varco

(NOV) - Get Report

and

Halliburton

(HAL) - Get Report

gained 5.1% and 2.6% each.

Elsewhere on the Nymex, the January contract for reformulated gasoline shed 2 cents, or 1.2%, to settle at $1.83 a gallon. January heating oil also fell, by 0.3% to $1.90 a gallon.

--Written by Sung Moss and Melinda Peer in New York

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