Natural gas prices rise as traders watch for storm threat to Gulf of Mexico productionBy Sandy Shore, AP
Thursday, September 23, 2010
Natural gas up on storm threat to production
Natural gas prices edged higher Thursday as traders kept an eye on a potential tropical storm that could disrupt Gulf of Mexico production.
In addition, natural gas inventories rose less than expected last week and electricity demand increased from year-ago levels, which helped to push up prices. Natural gas gained 5.3 cents to settle at $4.019 per 1,000 cubic feet on the New York Mercantile Exchange.
At the pump, the national average for a gallon of unleaded regular gasoline fell another half cent to $2.715, according to AAA, Wright Express and the Oil Price Information Service. The price has fallen almost 2 cents in the past week but remains 17.5 cents more than it was a year ago.
The National Hurricane Center said thunderstorms south of the Gulf of Mexico could become a tropical depression. With peak hurricane season at hand, traders are concerned about the potential for interruptions in offshore production even though natural gas supplies remain 6.2 percent above the five-year average.
Mike Zarembski, a senior commodity analyst at OptionsXpress Inc. in Chicago, said just the threat of a storm will keep traders on edge until hurricane season ends in November.
The Energy Department said natural gas inventories rose 73 billion cubic feet to 3.349 trillion cubic feet last week. That was less than analysts expected but still 6.2 percent more than the five-year average.
Warm fall weather boosted electricity production 3.1 percent from the same week in 2009, according to the Edison Electric Institute. More utilities are using cheap natural gas instead of coal to generate electricity, so extending the cooling season helps support gas prices.
Natural gas prices likely will fall once the storm threat in the Gulf has passed, MF Global analyst Mike Fitzpatrick said in a note to clients. “There is just too poor a fundamental picture to justify any significant rally,” he stated. “The onset of winter, at least enough to ramp up demand, is weeks away and storage is well more than ample.”
In other trading, oil prices rose after two reports provided some hope for the economic recovery strengthening. The Conference Board said its index of leading economic indicators increased more than expected in August and the National Association of Realtors said sales of previously occupied homes rose 7.6 percent last month after plummeting in July.
Benchmark oil for November delivery rose 47 cents to settle at $75.18 a barrel on the Nymex. In other trading, heating oil rose 0.75 cent to settle at $2.1145 a gallon and gasoline added 1.60 cents to settle at $1.9174 a gallon.
In London, Brent crude gained 16 cents to settle at $78.11 a barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Hungary and Alex Kennedy in Singapore contributed to this report.
Tags: Climate, Commodity Markets, Energy, Oil-prices, Prices, Storms, Weather Patterns