NEW YORK, N.Y. – Crude oil prices rose 0.4 per cent Thursday on expectations that the U.S. economy will continue to grow modestly and that the European debt crisis would not spread further.
Benchmark West Texas Intermediate crude climbed 43 cents to settle at US$104.55 on the New York Mercantile Exchange.
Brent crude, which is used by refiners to make most of the gasoline sold in the United States, rose 80 cents to $119.92 in London.
Natural gas prices fell at the end of the trading day to $2.036 per thousand cubic feet, a decline of three cents, after spending most of the day in positive territory.
In recent weeks natural gas prices have fallen to their lowest levels since 2002 because a historically warm winter and increased domestic production have boosted the amount of natural gas in storage.
The U.S. government reported Thursday that natural gas in storage rose by 47 billion cubic feet to 2.548 trillion cubic feet for the week ended April 20. That’s 56 per cent above the five-year average. The report was in line with what analysts expected according to a survey by Platts, the energy information arm of McGraw-Hill.
There is some expectation that natural gas will begin to rise. The price inched upward this week on forecasts a cool May in the U.S. Northeast, which could increase demand for the fuel.
Also, utilities are taking advantage of low natural gas prices by using more of the fuel to generate electricity. And drillers are starting to cut back their exploration for natural gas because prices are so low that drilling has become unprofitable in most locations.
Still, Phil Flynn, an analyst at PFG Best, says whatever increase in demand that comes from cool May weather will not be enough to alleviate the U.S. natural gas glut. Also, he says drillers will have a hard time cutting back because natural gas is produced along with oil and new drilling for oil is booming.
“The market is still broken,” he says. “The only way to fix this market is a major sell-off.”
At current consumption and production rates, America’s natural gas storage facilities are on track to be full by October, before the annual supply draw-down for winter heating begins.
In other energy trading, heating oil rose 3.3 cents to US$3.18 a U.S. gallon (3.79 litres) and wholesale gasoline futures rose 2.8 cents to US$3.183 a gallon.
(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)