Natural gas climbs as Obama announces US energy plan, oil prices edge lower
Chris Kahn, The Associated Press, On Wednesday March 30, 2011, 5:56 pm
By Chris Kahn, The Associated Press
NEWYORK, N.Y. - Natural gas prices climbed Wednesday as President BarackObama said he wanted the United States to use more of it instead offoreign oil. Colder weather also pushed up prices, as forecasterspredicted a cold snap for much of the U.S. in coming weeks.
Naturalgas for May delivery rose eight cents to US$4.339 per 1,000 cubic feetin afternoon trading on the New York Mercantile Exchange.
Meanwhile,benchmark crude for May delivery fell 16 cents to US$104.64 per barrelon the Nymex. In London, Brent crude added 15 cents at US$115.11 on theICE Futures exchange.
In its weekly report onpetroleum supplies, the Energy Department said U.S. crude supplies roseby 2.9 million barrels last week. Gasoline supplies fell by 2.7 millionbarrels.
Natural gas prices rose as Obamaannounced that he wants to cut U.S. oil imports by a third by 2025. Thepresident touted a string of initiatives, emphasizing that the U.S.could rely more on its own natural gas and biofuels to power vehiclesand produce electricity.
Fadel Gheit, an energyanalyst with Oppenheimer & Co., said the strategy makes sense: "Wehave abundance of natural gas in this country and the best technologyin the world. We should capitalize on that."
Techniquesrefined in recent years to extract natural gas from shale deposits havesignificantly boosted the amount of available gas.
Thisyear the Energy Information Administration doubled its estimate of theamount of natural gas the country has in shale formations, to 827trillion cubic feet. In all, EIA estimates the U.S. has 2,552 trillioncubic feet of potential natural gas resources, enough to satisfy thenation's annual demand for 110 years. The agency expects its estimatesto rise further in coming years because more shale resources are beingdiscovered.
Naturalgas prices remain in about the same range they've been in for threeyears as the recession and a surge in domestic production have keptprices in check. The price of oil, which the U.S. imports primarilyfrom Canada, Saudi Arabia and Mexico , has jumped in that period,rising 27 per cent in last 12 months alone.
MichaelLynch, president of Strategic Energy & Economic Research, saidObama's continued endorsement of natural gas drilling will convinceinvestors to be more bullish about natural gas. But government policiesusually don't affect short-term supply or consumption. Most traders arekeeping a closer eye on the weather, which is expected to remainunseasonably chilly in April.
"We're expecting snow," said Lynch, who is based in Winchester, Mass.. "Cold weather is going to keep natural gas demand high."
AccuWeather forecasters said Wednesday that chilly weather could linger in northern parts of the U.S. into May or June.
Inother Nymex trading for April contracts, heating oil was flat atUS$3.0595 per U.S. gallon (3.78 litres) and gasoline added two cents toUS$3.0624 a gallon.