Natural Gas Futures Soar; Crude Oil Slips
Prices of crude oil and natural gas have often moved in tandem, but not lately.
Natural gas futures soared to a record Monday on forecasts for frigid U.S. weather in much of the Northern United States.
Near-term futures in New York rocketed 76 cents, or 11%, to $7.433 per million British thermal units. The price has leaped more than 50% just since Nov. 6--a disturbing trend for consumers trying to keep their homes warm.
But crude oil futures Monday slid to their lowest level since early October, as Iraq and the United Nations discussed a possible compromise in a dispute over Iraq’s oil prices--which had led to suspension of Iraq’s oil exports Friday.
Near-term crude futures lost 80 cents to $31.22 a barrel in New York. The price has fallen from $35.38 a week ago.
The natural gas market sees only bad news right now, traders say. Temperatures in Chicago, the heart of the nation’s biggest market for gas heat, will fall to 5 degrees below zero this weekend and maybe lower, forecasters said.
“If you put together the forecasts for colder weather with the low [energy] inventories so early in the season, you have got an explosive mixture,” said Michael Fitzpatrick, a trader at Fimat USA Inc. in New York.
Contributing to the gas rally Monday was buying by utilities, which are trying to conserve inventories to meet peak demand during the winter months, said Jim Ritterbusch, president of Galena, Ill.-based energy consulting firm Ritterbusch & Associates.
“This early in the season, storage is treated like gold, and they don’t want to tap into inventories too aggressively,” he said.
Yet in the crude oil market, traders seem to be counting on pledges from Saudi Arabia and other producers to make up for any Iraqi shortfall.
Even so, that didn’t help the heating-oil market: Heating oil futures surged with natural gas Monday, on expectations for colder weather in the Northeast, the primary heating-oil market.
Near-term heating oil futures jumped 3.76 cents, or 3.9%, to $1.008 a gallon in New York.
