By CHRIS KAHN (AP) – 8 hours ago
http://www.google.com/hostednews/ap/article/ALeqM5i4_q7DtiEHvUTVNlJoaJ9ufkd1kgD9APTJPG0
NEW YORK — Natural gas prices have mostly moved in one direction this summer, down, and the vast caverns that hold it are close to reaching capacity. Yet since the beginning of the month prices have spiked 44 percent.
A record number of futures contracts were snapped up this week, most likely because buyers didn't see prices for natural gas getting much cheaper.
The jump in price would certainly be a troubling sign for people who use natural gas to heat their homes, save for the fact that, even with a 28 percent run-up this week, prices are still about a third of they were last year.
It's extremely cheap and no one expects that to change anytime soon.
"It's going to be very good winter for natural gas customers," analyst and trader Stephen Schork said.
Natural gas for October delivery added 32 cents Friday to settle at $3.778 per 1,000 cubic feet on the New York Mercantile Exchange.
All other types of fuel sank. Benchmark crude for October delivery gave up 43 cents to settle at $72.04 a barrel.
Just as oil prices spiked and then leveled off earlier this year, natural gas prices jumped more than 44 percent after sinking to $2.40 per 1,000 cubic feet on Sept. 4.
Investors flooded the market and natural gas futures reached a record 404,450 contracts on Tuesday, according to derivatives market CME Group.
The reason consumers and businesses that use a lot of electricity needn't worry is simple. The supply of natural gas is enormous.
American power plants are using a lot less natural gas because the recession has sapped demand for power. Stockpiles are quickly approaching the limit for what can be stored in underground caverns, and producers may start pushing excess supplies onto the open market.
"Where else will it go? We're not going to be able to put any more gas into the ground," Schork said.
The government said Thursday that there is nearly 3.5 trillion cubic feet of natural gas in storage, 16.4 percent more the five-year average for this time of year.
Analyst Addison Armstrong estimates that if producers keep pumping more gas into storage, the country's stockpiles will surpass the previous record of 3.545 trillion cubic feet in the next seven weeks.
It's not just natural gas, either.
The Energy Information Administration said Wednesday that the country is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high. U.S. crude stockpiles are 14 percent larger than last year.
Other than natural gas, prices on Nymex sank to end the week.
Gasoline for October delivery slipped 1.88 cents to settle at $1.8324 a gallon, and heating oil fell 1.3 cents to settle at $1.8279 a gallon.
At the pump, retail gas prices were unchanged at $2.55 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 7.8 cents cheaper than last month and $1.285 cheaper than a year ago.
In London, Brent crude fell 23 cents to settle at $71.55 on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.
Copyright © 2009 The Associated Press. All rights reserved.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment