Natural gas, heating oil and other energy prices rise as another storm heads east

By Chris Kahn, AP
Monday, February 8, 2010

Wintry weather drives energy prices higher

NEW YORK — Energy prices climbed Monday as another winter storm was expected to dump even more snow on the East Coast.

Already, parts of Virginia, Maryland, Pennsylvania and Washington are blanketed in about three feet of snow, knocking out power for tens of thousands of people and forcing government offices to close.

As those regions dig out and warm up, analysts said they expected to see sizable draws on the country’s supply of natural gas and heating oil. Mid-Atlantic states are some of the biggest natural gas and heating oil consumers in the country.

Oil, heating oil and gasoline prices increased in response to the weather. But the contract for natural gas, which remains in huge surpluses in the U.S., slid nearly 2 percent. Energy experts said natural gas levels may drop in coming weeks, but there’s still much more than normal for this time of year.

“When you look at the supply numbers, it’s hard to get excited about natural gas,” PFGBest analyst Phil Flynn said. “Unless it stays cold between now and June we’re not going to have any supply problems.”

The National Weather Service said Monday that another storm could drop at least a foot of fresh powder on the beleaguered Mid-Atlantic. Forecasters said the storm will be strongest in central northern Maryland, northern Delaware, and parts of New Jersey and Pennsylvania.

Forecaster Bruce Sullivan said the agency doesn’t “really see any warm weather in sight.”

The Weather Service also issued storm warnings throughout much of the Midwest. Temperatures on Tuesday are expected to get no higher than the 20s across large sections of the U.S. from Montana to Maine, according to agency forecasts.

Heating oil for March delivery added 1.07 cents to settle at $1.8855 a gallon on the New York Mercantile Exchange

If heating oil prices keep rising, utilities will eventually try to pass those costs along to consumers in higher rates. But it usually takes an extended surge in futures prices to affect home heating bills.

Benchmark crude for March delivery gained 70 cents to settle at $71.89 a barrel on the Nymex, rebounding from an 8 percent drop last week. In London, Brent crude gained 52 cents to settle at $70.11 on the ICE futures exchange.

At the pump, gasoline prices fell a half penny overnight to a new national average of $2.652 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 8.5 cents cheaper than last month, but it’s still 73.1 cents more expensive than the same time last year.

In other Nymex trading in March contracts, gasoline rose less than a penny to settle at $1.894 a gallon. Natural gas gave up 11.4 cents to settle at $5.401 per 1,000 cubic feet.

Associated Press writers Pablo Gorondi in Budapest, Hungary, and Chun Han Wong in Singapore contributed to this report.

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