Gas, Oil Prices Plunge, Drag Down Energy Stocks
Natural gas prices slumped Wednesday to their lowest levels since April 1999, and crude oil prices fell to three-week lows, as more signs of economic weakness suggested energy demand will wane.
The latest price declines hammered energy stocks, leaving them among Wall Street’s biggest losers Wednesday.
Natural gas futures for October dropped 12.3 cents, or 5.5%, to $2.10 per million British thermal units on the New York Mercantile Exchange, continuing this year’s dramatic plunge.
October crude oil futures slid 98 cents, or 3.5%, to $26.72 a barrel, also in New York.
As airlines slash their schedules in the aftermath of last week’s terrorist attacks, demand for jet fuel has dropped.
“Although there will be a little increase in military demand, it will not be enough to counter the big drop in commercial traffic,” said Sheryl Kaufman, economist at Phillips Petroleum Co., the second-biggest U.S. refining company.
Crude oil prices are down about 4% from levels just before the attacks.
Energy-exporting nations have continued to insist they will keep oil flowing.
“Those who are concerned that the recent World Trade Center attack would disrupt supplies should be assured that OPEC will not allow that to happen,” said Ali al-Naimi, Saudi Arabia’s oil minister. “We will make up shortages in supplies wherever they happen and for whatever reason.”
The natural gas market has been hit harder than oil in recent weeks amid expectations that a slowing economy will mean sharply curtailed gas demand by industrial users. Manufacturers account for a quarter of U.S. gas use.
“Our customers have reduced their production schedules in the short term, which is resulting in a downward adjustment for us,” said Cengiz Kurkcu, director of purchasing at Timken Co., which manufacturers bearings for Ford Motor Co., Caterpillar Inc. and other industrial giants. “All of us are consuming less energy in the process.”
On Wall Street, energy stocks were broadly lower as oil and gas prices fell. Exxon Mobil Corp. dropped $1.07 to $38.41, Unocal Corp. fell $1.19 to $32.16, Baker Hughes Inc. slid $3.24 to $28.95, Apache Corp. dropped $2.40 to $41.87, Valero Energy Corp. lost $2.90 to $34.54, and Amerada Hess Corp. was off $2.65 to $69.45.
