Friday, March 26, 2010

Gas Low at $3.91/MMBtu

NEW YORK — The futures contract for natural gas tumbled 3 percent Thursday after the government reported that supplies grew for the first time this year, adding to already bloated reserves.
The country had been burning large volumes of natural gas to heat homes and run power generators this winter as heavy snowstorms blanketed parts of the country. But the drawdown wasn't enough to erase huge surpluses built up during the past few years.
The Energy Information Administration said that at 1.63 trillion cubic feet, natural gas levels are 8 percent higher than the five-year average.
Natural gas for April delivery dropped 12.4 cents to settle at $3.981 per 1,000 cubic feet on the New York Mercantile Exchange. Prices fell as low as $3.94 earlier in the day, the lowest for the April contract.
Natural gas prices have gone through large fluctuations in the past few years. A contract for 1,000 cubic feet jumped above $13 in the summer of 2008 before plunging below $4 last summer. Natural gas prices started rising again as consumers cranked up the heat this winter, but they've since dropped off as the weather got warmer.
Thursday's settlement price was the lowest since September, according to the Energy Information Administration.
Oil prices also slipped as the dollar rose against other major currencies. Crude, which is priced in dollars, tends to fall in price as the greenback rises and makes oil barrels tougher to buy with foreign currency.
Benchmark crude for May delivery fell 8 cents to settle at $80.53 a barrel on the Nymex.
The Labor Department reported earlier in the day that jobless benefits dropped more than expected last week, before falling back later in the day. Gasoline demand should rise as more workers get back into the daily commute, but some analysts worry that it won't happen soon.
"It's reasonable to assume the unemployment rate in the U.S. will remain stubbornly high for at least the next two years," energy analyst Stephen Schork said in a report. "The table appears set for further demand destruction for gasoline, not just in the U.S., but in Europe as well."
Retail prices dipped less than a penny overnight to a new national average of $2.813 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 15.3 cents more expensive than it was a month ago and 82.7 cents more expensive than the same time last year.
In other Nymex trading in April contracts, heating oil fell less than a penny to settle at $2.0693 a gallon, and gasoline lost less than a penny to settle at $2.2177 a gallon.
In London, Brent crude slid a penny to settle at $79.61 on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.

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