Natural Gas Storage at All Time High

By CHRIS KAHN (AP) – 4 hours ago

NEW YORK — Natural gas prices tumbled nearly 8 percent Thursday after the government reported consumption has dropped so low that the U.S. is now storing more than at any other time on record.

The report was welcome news for homeowners who heat their homes and cook their meals with natural gas. Suppliers already have cut rates in many parts of the country as stockpiles ballooned above the five-year average, and a continued drop in natural gas prices should convince others to cut prices as well.

Natural gas for November delivery lost 37.5 cents to settle at $4.466 per 1,000 cubic feet on the New York Mercantile Exchange.

The Energy Information Administration reported Thursday 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 U.S. 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."

Elsewhere, oil prices ticked higher as the dollar strengthened and traders mulled a mixed bag of economic reports that suggested the country wouldn't enjoy a swift economic recovery.

Benchmark crude for November delivery added 21 cents to settle at $70.82 on the Nymex. In London, Brent crude lost 12 cents to settle at $69.19 on the ICE Futures exchange.

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 147 points, and the Standard & Poor's 500 index gave up 21, down about 2 percent.

At the pump, retail gas prices fell by a penny overnight to a new national average of $2.469 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular gas is 13.8 cents cheaper than last month and $1.15 cheaper than the same time last year.

In other Nymex trading, gasoline for November delivery added less than a penny to settle at $1.7579 a gallon, and heating oil lost a half cent to settle at $1.8274 a gallon.

Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.

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