Natural gas prices fell Thursday as traders brushed off a decline in supplies that followed a blast of cold weather over a large part of the country from the Northeast to Florida.
Natural gas for January delivery fell 17.4 cents to settle at $4.048 per 1,000 cubic feet on the New York Mercantile Exchange. The price is down about almost 8 percent in the past week.
Supplies fell as more Americans turned up the heat. Although shrinking supplies can boost prices, analysts said traders largely expected the decline in supply, so it was already worked into the contract price.
Natural gas is also used in about 20 percent of the nation's power plants to produce electricity, according to the Edison Electric Institute. EEI said electricity demand rose about 3.5 percent nationwide last week, with heftier gains in New England, the central section of the country and the Southeast. Many households are using more electricity this time of year for space heating and holiday lighting.
In its weekly report on natural gas, the Energy Department said that supplies are nearly 10 percent above the five-year average. Supplies are likely to remain high and prices low, thanks to abundant sources in shale fields around the country. A new government forecast calls for natural gas production from shale to grow more than 20 percent by 2035.
"The inventories are just so high that it implies to people that the market is not going to tighten at any time so that's keeping the weather from pushing it up the way you would normally expect," said Michael Lynch, president of Strategic Energy & Economic Research.
Meanwhile, the national average for regular gasoline held steady at $2.984 a gallon on Thursday, according to AAA, Wright Express and the Oil Price Information Service. That's about 9 cents higher than a month ago and 39 cents more than a year ago.
In other energy trading, oil prices slid despite another batch of positive economic news. Government agencies said fewer people applied for jobless benefits and housing starts rose slightly in November. That followed earlier reports that factory production and retail sales posted gains in November.
Lynch said traders are cautious because signs of the improving economy have been offset recently by occasional warnings about inflation as well as unemployment that remains at 9.8 percent.
Also, the dollar got a little stronger on Thursday, making oil more expensive for buyers with foreign currency.
Benchmark oil for January delivery fell 92 cents to settle at $87.70 a barrel on the New York Mercantile Exchange. Heating oil lost 0.72 cent to settle at $2.4763 a gallon and gasoline gave up 0.49 cent to settle at $2.3043 a gallon.
In London, Brent crude fell 49 cents to settle at $91.71 a barrel on the ICE futures exchange.
The hottest stories ripped from the headlines, from crime to courts, legal and scandal.
