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Natural gas tumbles with most ever in storage
Source: Agencies |
October 2, 2009, Friday
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NATURAL gas prices tumbled nearly 8 percent yesterday after the government reported consumption has dropped so low that the US is now storing more than at any other time on record.
Elsewhere, oil prices ticked higher as the dollar strengthened and traders mulled a mixed bag of economic reports that suggested the United States wouldn't enjoy a swift economic recovery.
Benchmark crude for November delivery added 21 cents to settle at US$70.82 on the Nymex. In London, Brent crude lost 12 cents to settle at US$69.19 on the ICE Futures exchange.
Natural gas for November delivery lost 37.5 cents to settle at US$4.466 per 1,000 cubic feet on the New York Mercantile Exchange.
The Energy Information Administration reported yesterday that underground aquifers and caverns in the lower 48 states stored 3.589 trillion cubic feet of natural gas last week, topping the previous all-time high of 3.545 trillion cubic feet set on Nov. 2, 2007. Government records go back to 1975.
Analyst Steven Schork said supplies have grown so much that the US is nearing its storage capacity for natural gas. If that happens, producers could dump more of it on the open market, dropping prices even more.
But Peter Beutel at Cameron Hanover said prices have dropped so low this summer that they'll likely spring back as winter approaches.
"We'll start drawing down those supplies," Beutel said "especially if it's cold and the economy starts to pick back up."
Reports by the Commerce and Labor departments said that while consumer and construction spending grew in August, the number of people claiming first-time unemployment benefits increased more than expected last week.
Although the Institute for Supply Management's index of manufacturing activity showed a second straight month of growth in September, the reading was well below what analysts expected.
The mixed economic news helped equities markets start the fourth quarter on a sour note. The Dow Jones industrial average lost about 150 points in late afternoon trading, and the Standard & Poor's 500 index gave up 21, down about 2 percent.
In other Nymex trading, gasoline for November delivery added less than a penny to settle at US$1.7579 a gallon, and heating oil lost a half cent to settle at US$1.8274 a gallon.
Elsewhere, oil prices ticked higher as the dollar strengthened and traders mulled a mixed bag of economic reports that suggested the United States wouldn't enjoy a swift economic recovery.
Benchmark crude for November delivery added 21 cents to settle at US$70.82 on the Nymex. In London, Brent crude lost 12 cents to settle at US$69.19 on the ICE Futures exchange.
Natural gas for November delivery lost 37.5 cents to settle at US$4.466 per 1,000 cubic feet on the New York Mercantile Exchange.
The Energy Information Administration reported yesterday that underground aquifers and caverns in the lower 48 states stored 3.589 trillion cubic feet of natural gas last week, topping the previous all-time high of 3.545 trillion cubic feet set on Nov. 2, 2007. Government records go back to 1975.
Analyst Steven Schork said supplies have grown so much that the US is nearing its storage capacity for natural gas. If that happens, producers could dump more of it on the open market, dropping prices even more.
But Peter Beutel at Cameron Hanover said prices have dropped so low this summer that they'll likely spring back as winter approaches.
"We'll start drawing down those supplies," Beutel said "especially if it's cold and the economy starts to pick back up."
Reports by the Commerce and Labor departments said that while consumer and construction spending grew in August, the number of people claiming first-time unemployment benefits increased more than expected last week.
Although the Institute for Supply Management's index of manufacturing activity showed a second straight month of growth in September, the reading was well below what analysts expected.
The mixed economic news helped equities markets start the fourth quarter on a sour note. The Dow Jones industrial average lost about 150 points in late afternoon trading, and the Standard & Poor's 500 index gave up 21, down about 2 percent.
In other Nymex trading, gasoline for November delivery added less than a penny to settle at US$1.7579 a gallon, and heating oil lost a half cent to settle at US$1.8274 a gallon.
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