NEW YORK – Natural gas prices on Thursday slipped to a new low for the year after the government reported that U.S. supplies grew more than expected last week.
The Energy Information Administration said the natural gas held in underground storage expanded by 93 billion cubic feet last week. Analysts expected an increase of between 86 and 90 billion cubic feet, according to Platts, the energy information arm of McGraw-Hill Cos.
Natural gas futures tumbled shortly after the report, dropping to a new 52-week low of $3.372 per 1,000 cubic feet on the New York Mercantile Exchange. In midday trading natural gas was down 15.8 cents, or 4.5 percent, at $3.381 per 1,000 cubic feet.
Unlike oil, natural gas hasn't seen a big rebound in prices this year, in part because of the hefty storage levels. Petroleum companies also have aggressively expanded drilling operations in America's vast shale formations, producing more natural gas at a time when supplies are already high.
Prices probably will continue to slide toward the end of the year, benefiting homeowners who use natural gas for heat and utilities that generate electricity with it, analyst and trader Stephen Schork said.
Natural gas prices tend to rise as the weather chills and people crank up the heat.
"The rally usually starts right about now, but it's not coming," Schork said. "There's a lot of gas already in the ground, there's no significant weather out there, and the economy is still struggling."
The EIA report said that the U.S. had 3.68 trillion cubic feet of natural gas in underground storage last week. That's 1.3 percent less than last year's supply, but 8.4 percent higher than the five-year average.
Benchmark crude for December delivery also gave up $1.57 at $80.97 a barrel on the Nymex. In London, Brent crude dropped $1.12 to $82.48 a barrel on the ICE Futures exchange.
Meanwhile, retail gasoline prices held steady at $2.831 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 11 cents more expensive than a month ago and 23.5 cents higher than a year ago.
In other Nymex trading in November contracts, heating oil fell 2.64 cents to $2.2284 a gallon and gasoline dropped 2.64 cents to $2.0562 a gallon.
Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.