Natural gas prices fell sharply Thursday after the government said supplies expanded more than expected amid ongoing weak demand for oil and gas.
Meanwhile, fresh reports indicating the U.S. economy is getting stronger boosted oil prices above $85 a barrel.
Natural gas prices fell 8.5 percent after the Energy Department's Energy Information Administration said natural gas inventories held in underground storage in the lower 48 states grew by 83 billion cubic feet to about 1.912 trillion cubic feet for the week ended April 23.
Analysts expected an increase of 72 billion to 76 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. The inventory level was 18.8 percent above the five-year average and 5.6 percent above last year's storage level.
Natural gas for June delivery fell 36.8 cents to settle at $3.980 per 1,000 cubic feet on the New York Mercantile Exchange.
Supplies are growing even as more companies look for new natural gas sources, analyst Hamza Khan of the Schork Report said. The hope is that gas will be used instead of coal to run more power plants, because it burns cleaner with fewer emissions. For now, demand for electricity and natural gas is weak in the recovering economy.
"We're expecting huge builds in natural gas and that's exactly what we're seeing," Khan said.
Both oil and retail gasoline rose for a second day despite increasing crude inventories. Analysts think traders are looking past that to signs of an improving economy.
"The bottom line is that the symptoms keep changing, but the underlying source of strength is a boundless hope that economic recovery will give us higher demand," U.S. energy consultancy Cameron Hanover said in a report. "It seems to be good enough for oil prices, even if it makes little sense to us."
Benchmark crude for June delivery rose $1.95 to settle at $85.17 per barrel on the New York Mercantile Exchange.
Oil followed the stock market higher, which rose on encouraging earnings reports from a number of companies and signs of a stronger economy. Exxon Mobil Corp., ConocoPhillips and Occidental Petroleum Corp. said their first-quarter profits jumped significantly on higher oil prices, and the Labor Department said initial claims for unemployment benefits fell last week.
The dollar grew weaker against other global currencies, making commodities like oil, which are priced in dollars, more attractive to overseas buyers.
Retail gasoline prices rose 0.8 cent per gallon overnight to a national average of $2.877, according to AAA, Wright Express and Oil Price Information Service.
In other Nymex trading in May contracts, heating oil rose 2.22 cents to settle at $2.2512 a gallon, and gasoline gained 2.29 cents to settle at $2.3556 a gallon. Both contracts expire Friday.
In London, Brent crude rose 74 cents to settle at $86.90 on the ICE futures exchange.
Associated Press writers Pablo Gorondi and Alex Kennedy contributed to this report.
Source: http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD9FCTK4G2
Meanwhile, fresh reports indicating the U.S. economy is getting stronger boosted oil prices above $85 a barrel.
Natural gas prices fell 8.5 percent after the Energy Department's Energy Information Administration said natural gas inventories held in underground storage in the lower 48 states grew by 83 billion cubic feet to about 1.912 trillion cubic feet for the week ended April 23.
Analysts expected an increase of 72 billion to 76 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. The inventory level was 18.8 percent above the five-year average and 5.6 percent above last year's storage level.
Natural gas for June delivery fell 36.8 cents to settle at $3.980 per 1,000 cubic feet on the New York Mercantile Exchange.
Supplies are growing even as more companies look for new natural gas sources, analyst Hamza Khan of the Schork Report said. The hope is that gas will be used instead of coal to run more power plants, because it burns cleaner with fewer emissions. For now, demand for electricity and natural gas is weak in the recovering economy.
"We're expecting huge builds in natural gas and that's exactly what we're seeing," Khan said.
Both oil and retail gasoline rose for a second day despite increasing crude inventories. Analysts think traders are looking past that to signs of an improving economy.
"The bottom line is that the symptoms keep changing, but the underlying source of strength is a boundless hope that economic recovery will give us higher demand," U.S. energy consultancy Cameron Hanover said in a report. "It seems to be good enough for oil prices, even if it makes little sense to us."
Benchmark crude for June delivery rose $1.95 to settle at $85.17 per barrel on the New York Mercantile Exchange.
Oil followed the stock market higher, which rose on encouraging earnings reports from a number of companies and signs of a stronger economy. Exxon Mobil Corp., ConocoPhillips and Occidental Petroleum Corp. said their first-quarter profits jumped significantly on higher oil prices, and the Labor Department said initial claims for unemployment benefits fell last week.
The dollar grew weaker against other global currencies, making commodities like oil, which are priced in dollars, more attractive to overseas buyers.
Retail gasoline prices rose 0.8 cent per gallon overnight to a national average of $2.877, according to AAA, Wright Express and Oil Price Information Service.
In other Nymex trading in May contracts, heating oil rose 2.22 cents to settle at $2.2512 a gallon, and gasoline gained 2.29 cents to settle at $2.3556 a gallon. Both contracts expire Friday.
In London, Brent crude rose 74 cents to settle at $86.90 on the ICE futures exchange.
Associated Press writers Pablo Gorondi and Alex Kennedy contributed to this report.
Source: http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD9FCTK4G2
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