Natural Gas Prices Surge to New High
The natural gas bull market rolls on.
Gas futures in New York soared more than 7% Wednesday to a record after an industry report showed U.S. inventories rose too little to ensure adequate supply for the winter heating season.
Inventories rose 2.5% last week, the American Gas Assn. reported. Although the gain was close to expectations, storage depots hold 13% less than a year ago with the start of the peak-demand winter season just weeks away.
The AGA report shows “that the supply and demand balance is still tight,” said Kyle Cooper, an analyst with Salomon Smith Barney in Houston.
Natural gas futures for November delivery rocketed 37.4 cents, or 7.3%, to $5.508 per million British thermal units on the New York Mercantile Exchange, the highest closing price in 10 years of trading on the Nymex.
It was the biggest one-day gain since June 5.
Crude oil futures, which had surged on Tuesday, added 7 cents to $33.25 a barrel in New York on Wednesday.
Gas prices have more than doubled this year on concern that inventories will be too low this winter. The government predicted on Friday that Americans can expect to spend 44% more to heat their homes with gas this winter.
The forecast from the U.S. Energy Department was based on higher gas prices and expectations that colder weather this winter will boost consumption. Last winter was the warmest on record in the U.S.
What’s bad for consumers is good for energy companies’ stocks--or so Wall Street believes. Gas-related stocks rising on Wednesday, while the broad market suffered another steep plunge, included Burlington Resources (BR), up $2.50 to $39.94; Enron (ENE), up $1.13 to $82.81; Apache (APA), up $2.31 to $65.81; Noble Affiliates (NBL), up $1.38 to $39.94; and Unocal (UCL), up 63 cents to $36.75.
