Search the web
Sign In
New User?Sign Up
AP

Welcome [Sign In] To track stocks & more, Register
Financial News
Enter symbol(s)   Symbol Lookup
$7 TRADES!   Click Here Click Here

AP
Natural Gas Prices Reach All-Time High
Tuesday December 13, 3:53 pm ET
By Madlen Read, AP Business Writer
Natural Gas Prices Reach All-Time High As Disrupted Production in Gulf of Mexico Worries Traders

NEW YORK (AP) -- Natural-gas prices surged to an all-time high Tuesday, as cold weather in the United States and ongoing disrupted production in the Gulf of Mexico caused traders to worry that supplies of home-heating fuels will be tight this winter.

ADVERTISEMENT
Nymex natural gas for January rose as high as $15.78 per 1,000 cubic feet then settled at $15.378, up 53.7 cents from Monday's settlement. The previous record close was $14.994 on Dec. 8.

"The last thing consumers needed to have happen is a cold snap early in the season," said John Kilduff, analyst at Fimat USA, noting that temperatures have been well below normal in many parts of the country. "With a quarter of natural gas off-line in the Gulf, it's just stoking the winter supply fears."

By Wednesday, a storm will bring snow to the upper Midwest, while an ice storm will move up the east coast by Thursday, according to Accuweather forecasters. December has been colder than usual so far, and many forecasters are saying below-average temperatures will persist throughout the winter.

Natural gas is most commonly used to heat homes in the Midwestern states, while heating oil is most commonly used in the Northeast.

Kilduff predicted that the price of natural gas could rise as high as $20 per 1,000 cubic feet by the middle of January.

According to Francisco Blanch, senior energy analyst at Merrill Lynch, natural gas prices are trading above heating oil prices on a calorie-value equivalence basis, a rare occurrence over the past 15 years.

Nymex heating oil gained 6.4 cents to settle at $1.8365 a gallon Tuesday, while gasoline settled marginally lower at $1.6459 a gallon.

Crude-oil prices held above $61 a barrel, after the International Energy Agency predicted that global oil demand growth will recover next year. Oil prices also were supported by OPEC's decision Monday to keep its production steady at record levels for now but to meet next month to consider reducing output.

Light sweet crude for January delivery rose 7 cents to settle at $61.37 a barrel on the New York Mercantile Exchange, the highest closing price since Nov. 3.

January Brent futures at London's ICE Futures exchange rose 2 cents to settle at $59.48 a barrel.

With the price of natural gas so high, industrial customers with fuel-switching capabilities may begin to use more heating oil, Blanch wrote in a weekly report on global energy.

Effective heating oil-to-gas switching capacity in the United States is about 2 billion cubic feet per day, or 340 thousand barrels a day, roughly equating to U.S. Gulf of Mexico gas production off-stream, Blanch said.

As of Monday, 2.312 billion cubic feet a day, or 23 percent, of natural-gas production and 441,394 barrels a day, or 29 percent, of oil production in the Gulf remained blocked, according to the U.S. Minerals Management Service. The region, which accounts for 21 percent of U.S. natural gas production and 30 percent of U.S. oil production, has lost 526.223 billion cubic feet of natural gas and 101.7 million barrels of oil since late August, when Hurricane Katrina hit.

The Paris-based IEA forecast that world oil demand in 2006 would increase by 1.79 million barrels a day -- a 2.2 percent increase on the year. The bulk of the increase is expected in the second half of the year, with the U.S. showing the sharpest increases, the IEA said.

Meanwhile, the U.S. Energy Department on Monday discarded earlier predictions that oil prices would drop to around $30 a barrel, saying costs will persist near or above $50 a barrel for years and force a shift to more fuel-efficient cars and alternative fuels.

But the department's forecast was more positive on natural-gas futures, saying they would retreat from the recent spikes and settle at under $5 in the long term as demand weakens, especially for electricity production.

Associated Press writer Gillian Wong in Singapore contributed to this report.



Mail to Friend Email Story
Alerts Set News Alert
Printer Version  Print Story 

Sponsor Results
Home Improvement Loans
American General will make your home improvements happen. Get a loan online today.
agf.rqst4.info
Home Improvement Loan - Homestore.com
Find information, articles and quotes for home loans in your area. We have the loan that's right for you. Complete our easy form and get free, competitive quotes.
homestore.com
Remodeling Loan Experts
Are you interested to compare remodeling loan offers and decide which loan is great for you? Let thousands of prescreened lenders specialized in home improvement compete for your loan.
www.remodelingloan.com
(What's This?)

Top Stories
·Fed Boosts Interest Rate to 4.25 Percent - AP (3:10 pm)
·Retail Sales, Business Inventories Rise - AP (12:57 pm)
·Stocks Up After Fed Lifts Interest Rates - AP (3:38 pm)
·Lay Reiterates Innocence Ahead of Trial - AP (3:48 pm)
More...

·More AP
·Most-emailed articles
·Most-viewed articles


Copyright © 2005 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service - Copyright Policy - Ad Feedback
Copyright © 2005 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.
=