By SANDY SHORE
AP Business Writer
The price of natural gas is dropping as mild weather curtails demand in parts of the country while supplies continue to build.
Natural gas fell 6.77 cents, or 2.5 percent, to $2.62 per 1,000 cubic feet Thursday in New York. Despite a recent rally, the price remains sensitive to reports of significant increase in supply given a current glut.
Natural gas plummeted earlier this year as a production boom helped fill storage facilities while a mild winter allowed consumers and businesses to use less gas for heat. On April 19, the price hit $1.907 per 1,000 cubic feet, the lowest level in more than a decade.
The price came back after that as some energy companies reduced production. Utilities also switched to using gas to generate power because it was cheaper than coal. Or as a substitute for nuclear power that was offline for maintenance, PFGBest analyst Phil Flynn said. Natural gas was up 37 percent from April's low as of Wednesday's close.
The Energy Department reported Thursday that natural gas stockpiles rose 61 billion cubic feet to 2.667 trillion cubic feet for the week that ended May 11. That's nearly 41 percent above year-earlier levels and the five-year average.
Now, the mild winter has given way to a mild spring in many areas. That means there isn't the need to cool off homes and businesses with air conditioning systems just yet. And Flynn said many of the idle nuclear plants are being returned to operation, which could reduce the utilities' need for natural gas.
Electricity demand from January through May 12 fell about 3.3 percent from the same period a year ago, according to Edison Electric Institute, the country's main electric utility trade group.
In other trading, oil prices fell as worries persisted about the future of Greece in the European Union and the long-term impact the crisis could have on the global economy. Some wonder if Greece will be forced to leave the group of countries that use the euro as currency if Greek politicians who oppose austerity measures win next month's elections.
That uncertainty has outweighed positive U.S. economic news. The Labor Department said that weekly applications for unemployment benefits were unchanged last week at a seasonally adjusted 370,000. That indicated modest gains in the job market.
Benchmark oil fell 44 cents to $92.37 in New York. Brent crude, which is used to price many international oil products, fell $1.94 to $107.84 in London.
Heating oil dropped 2.85 cents to $2.8691 per gallon and gasoline futures declined 3.09 cents to $2.89 per gallon.
Meanwhile, the national average for retail gasoline fell about a half cent overnight to $3.722 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's about 18 cents less than a month ago and 22 cents less than a year ago.
Copyright 2012 The Associated Press.
All content © Copyright 2000 - 2013 WorldNow and WVNS. All Rights Reserved.
