Natural Gas Priced at $9.40/mmBtu as Investors Buy Natural Gas

Natural gas advanced as the dollar fell against the euro, lifting the appeal of commodities as an alternative investment.

The dollar declined on a report showing the U.S. economy lost jobs for a third month, prompting investors to buy commodities as a hedge against the weaker currency and inflation. Crude oil surged above $105 a barrel.

``We're getting a pop on the dollar'' falling, said Michael Rose, trading director at Angus Jackson Inc. in Fort Lauderdale, Florida. People are piling money into ``energy commodities.''

Natural gas for May delivery rose 5.1 cents, or 0.5 percent, to $9.468 per million British thermal units at 11:57 a.m. on the New York Mercantile Exchange. Gas fell 4.2 percent yesterday.

Crude oil for May delivery rose $1.41, or 1.4 percent, to $105.24 a barrel in New York. Futures prices climbed to $111.80 a barrel on March 17, the highest since trading began in 1983.

Natural gas also rose on speculation that inventories are insufficient to meet summer cooling demand and rebuild enough to satisfy next winter's heating needs.

``There's a real tug of war going on between the bulls and the bears,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``Natural gas storage is low, though there's nothing to really move the market right now'' as temperatures moderate with spring's arrival.

Futures prices are getting ``good support'' around $9.40 per million Btu and will probably move higher to about $12 this summer, Neill said.

Stockpiles were 1.248 trillion cubic feet in the week ended March 28, or 304 billion cubic feet below the 1.552 trillion level of a year ago, the U.S. Energy Department said a report yesterday. Supplies started the heating-demand season on Nov. 1 at a record 3.545 trillion cubic feet.

Lower Storage

``Storage represents one of the lowest levels at the start of rebuilding season in recent years,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``It may be difficult to build supplies back up to comfortable levels ahead of next winter if cooling demand this summer is higher than expected.''

Supplies are the lowest since 2005 for this time of year. Storage was at 1.569 trillion cubic feet at the end of March 2007 and 1.695 trillion cubic feet in 2006, according to the Energy Department.

Inventories have dropped this winter more than analysts anticipated as demand surged and crude oil prices rose.

LNG Imports

Lower imports of liquefied natural gas, or LNG, are also helping push U.S. prices higher, analysts have said.

LNG imports this year may fall below the average 2.1 billion cubic feet a day in 2007. Analysts credit LNG, gas that has been cooled to a liquid state so that it can be moved by tankers to markets not connected by pipelines, with helping inventories to climb to last November's record.

The price gap between the U.S. and U.K. widened this week to almost $2 per million Btu.

February imports of LNG declined 46 percent to 23.6 billion cubic feet from 44.1 billion the same month a year earlier, the Energy Department said on April 1.