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Natural gas prices rise on Obama, crude falls
Source: Agencies |
March 31, 2011, Thursday
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NATURAL gas prices climbed more than 2 percent yesterday as President Barack Obama said he wanted the US to use more of it instead of foreign oil. Forecasts for colder weather also pushed up prices.
Natural gas for May delivery added 9.2 cents to settle at US$4.355 per 1,000 cubic feet on the New York Mercantile Exchange.
Meanwhile, benchmark West Texas Intermediate crude for May delivery fell 52 cents to settle at US$104.27 a barrel on the Nymex, pressured by high US stockpiles in spite of violent political protests throughout the oil-rich Middle East.
In its weekly report on petroleum supplies, the Energy Department yesterday said US crude supplies rose by 2.9 million barrels last week. Gasoline supplies fell by 2.7 million barrels.
In London, Brent crude lost 1 cent to settle at US$114.95 on the ICE Futures exchange.
Obama announced that he wants to cut America's oil imports by a third by 2025. The president touted a series of initiatives, emphasizing that the US could rely more on its own natural gas and biofuels to generate electricity and to power vehicles.
Obama cited the pain at the gas pump drivers have experienced in recent months as one of the most obvious reasons for reducing America's dependence on foreign oil. Gasoline prices continued to rise yesterday.
Fadel Gheit, an energy analyst with Oppenheimer & Co., said the president's energy strategy makes sense: "We have abundance of natural gas in this country and the best technology in the world. We should capitalize on that."
Shares of natural gas companies Chesapeake Energy Corp., Range Resources Corp., EQT Corp. and Energen Corp. rose throughout the day. Chesapeake and Range shares gained about 3 percent.
The industry has been on a roll lately. It benefited indirectly earlier this month when the Environmental Protection Agency announced stricter emissions standards for coal-fired power plants. That could drive more utilities to switch to natural gas to run generators. Some were already using more natural gas, because it was more affordable than coal and had lower greenhouse-gas emissions.
Some municipal bus systems, taxi companies and trash collectors also have started using natural gas-powered vehicles, and automakers are working on new models that run on natural gas. Richard Kolodziej, president of the Natural Gas Vehicle Association, a lobbying group, said Obama's support will boost efforts in Congress to expand tax incentives on natural gas vehicles.
Techniques refined in recent years to extract natural gas from shale deposits have significantly boosted the amount of available gas. This year the Energy Information Administration doubled its estimate of the amount of natural gas the US has in shale formations, to 827 trillion cubic feet. In all, EIA estimates the US has 2,552 trillion cubic feet of potential natural gas resources, enough to satisfy the nation's annual demand for 110 years. The agency expects its estimates to rise further in coming years because more shale resources are being discovered.
Natural gas prices have been relatively depressed because of weak demand during the recession and a surge in domestic production. The price for natural gas has increased about 11 percent since March 2009. Oil has more than tripled since then.
Michael Lynch, president of Strategic Energy & Economic Research, said Obama's continued endorsement of natural gas drilling will convince investors to be more bullish about natural gas. Still, government policies usually don't affect short-term supply or consumption. Most traders are keeping a closer eye on the weather, which is expected to remain unseasonably chilly across much of the US in April.
"We're expecting snow," said Lynch, who is based in Winchester, Massachusetts. "Cold weather is going to keep natural gas demand high." That's helped boost prices, he said.
AccuWeather forecasters said yesterday that chilly weather could linger in northern parts of the US into May or June.
In other Nymex trading for April contracts, heating oil was flat to settle at US$3.0534 per gallon and gasoline added 1.4 cents to settle at US$3.0573 per gallon.
Natural gas for May delivery added 9.2 cents to settle at US$4.355 per 1,000 cubic feet on the New York Mercantile Exchange.
Meanwhile, benchmark West Texas Intermediate crude for May delivery fell 52 cents to settle at US$104.27 a barrel on the Nymex, pressured by high US stockpiles in spite of violent political protests throughout the oil-rich Middle East.
In its weekly report on petroleum supplies, the Energy Department yesterday said US crude supplies rose by 2.9 million barrels last week. Gasoline supplies fell by 2.7 million barrels.
In London, Brent crude lost 1 cent to settle at US$114.95 on the ICE Futures exchange.
Obama announced that he wants to cut America's oil imports by a third by 2025. The president touted a series of initiatives, emphasizing that the US could rely more on its own natural gas and biofuels to generate electricity and to power vehicles.
Obama cited the pain at the gas pump drivers have experienced in recent months as one of the most obvious reasons for reducing America's dependence on foreign oil. Gasoline prices continued to rise yesterday.
Fadel Gheit, an energy analyst with Oppenheimer & Co., said the president's energy strategy makes sense: "We have abundance of natural gas in this country and the best technology in the world. We should capitalize on that."
Shares of natural gas companies Chesapeake Energy Corp., Range Resources Corp., EQT Corp. and Energen Corp. rose throughout the day. Chesapeake and Range shares gained about 3 percent.
The industry has been on a roll lately. It benefited indirectly earlier this month when the Environmental Protection Agency announced stricter emissions standards for coal-fired power plants. That could drive more utilities to switch to natural gas to run generators. Some were already using more natural gas, because it was more affordable than coal and had lower greenhouse-gas emissions.
Some municipal bus systems, taxi companies and trash collectors also have started using natural gas-powered vehicles, and automakers are working on new models that run on natural gas. Richard Kolodziej, president of the Natural Gas Vehicle Association, a lobbying group, said Obama's support will boost efforts in Congress to expand tax incentives on natural gas vehicles.
Techniques refined in recent years to extract natural gas from shale deposits have significantly boosted the amount of available gas. This year the Energy Information Administration doubled its estimate of the amount of natural gas the US has in shale formations, to 827 trillion cubic feet. In all, EIA estimates the US has 2,552 trillion cubic feet of potential natural gas resources, enough to satisfy the nation's annual demand for 110 years. The agency expects its estimates to rise further in coming years because more shale resources are being discovered.
Natural gas prices have been relatively depressed because of weak demand during the recession and a surge in domestic production. The price for natural gas has increased about 11 percent since March 2009. Oil has more than tripled since then.
Michael Lynch, president of Strategic Energy & Economic Research, said Obama's continued endorsement of natural gas drilling will convince investors to be more bullish about natural gas. Still, government policies usually don't affect short-term supply or consumption. Most traders are keeping a closer eye on the weather, which is expected to remain unseasonably chilly across much of the US in April.
"We're expecting snow," said Lynch, who is based in Winchester, Massachusetts. "Cold weather is going to keep natural gas demand high." That's helped boost prices, he said.
AccuWeather forecasters said yesterday that chilly weather could linger in northern parts of the US into May or June.
In other Nymex trading for April contracts, heating oil was flat to settle at US$3.0534 per gallon and gasoline added 1.4 cents to settle at US$3.0573 per gallon.
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