The price of natural gas is dropping as mild weather curtails demand in parts of the
country while supplies continue to build.
Natural
gas fell 6.77 cents, or 2.5 percent, to $2.62 per 1,000 cubic feet
Thursday in New York. Despite a recent rally, the price remains
sensitive to reports of significant increase in supply given a current
glut.
Natural gas plummeted earlier this year as a production boom
helped fill storage facilities while a mild winter allowed consumers
and businesses to use less gas for heat. On April 19, the price hit
$1.907 per 1,000 cubic feet, the lowest level in more than a decade.
The
price came back after that as some energy companies reduced production.
Utilities also switched to using gas to generate power because it was
cheaper than coal. Or as a substitute for nuclear power that was offline
for maintenance, PFGBest analyst Phil Flynn said. Natural gas was up 37
percent from April’s low as of Wednesday’s close.
The Energy
Department reported Thursday that natural gas stockpiles rose 61 billion
cubic feet to 2.667 trillion cubic feet for the week that ended May 11.
That’s nearly 41 percent above year-earlier levels and the five-year
average.
Now, the mild winter has given way to a mild spring in
many areas. That means there isn’t the need to cool off homes and
businesses with air conditioning systems just yet. And Flynn said many
of the idle nuclear plants are being returned to operation, which could
reduce the utilities’ need for natural gas.
Electricity demand
from January through May 12 fell about 3.3 percent from the same period a
year ago, according to Edison Electric Institute, the country’s main
electric utility trade group.
In other trading, oil prices fell as
worries persisted about the future of Greece in the European Union and
the long-term impact the crisis could have on the global economy. Some
wonder if Greece will be forced to leave the group of countries that use
the euro as currency if Greek politicians who oppose austerity measures
win next month’s elections.
That uncertainty has outweighed
positive U.S. economic news. The Labor Department said that weekly
applications for unemployment benefits were unchanged last week at a
seasonally adjusted 370,000. That indicated modest gains in the job
market.
Benchmark oil fell 44 cents to $92.37 in New York. Brent
crude, which is used to price many international oil products, fell
$1.94 to $107.84 in London.
Heating oil dropped 2.85 cents to $2.8691 per gallon and gasoline futures declined
3.09 cents to $2.89 per gallon.
Meanwhile,
the national average for retail gasoline fell about a half cent
overnight to $3.722 per gallon, according to AAA, Wright Express and the
Oil Price Information Service. That’s about 18 cents less than a month
ago and 22 cents less than a year ago.
Copyright 2012 The Associated Press.