Natural gas prices fell more than 2 percent Thursday after the government reported that U.S. supplies fell, though not enough to justify higher prices.
The recent cold snap throughout the U.S. had many traders expecting an even bigger decline in supplies. When that didn't happen, they decided it was time to sell, according to analyst and trader Stephen Schork.
Gas prices have dropped well below the levels they were at from 2007 and 2008, and "everyone's trying to time the bottom of the market," Schork said. "They keep waiting for natural gas to rally, but it's been three years and nothing's happened."
Natural gas for March delivery fell 9.2 cents to settle at $4.337 per 1,000 cubic feet on the New York Mercantile Exchange. Prices have risen slightly since October, when gas traded for less than $3.30 per 1,000 cubic feet. But they're nowhere near levels in 2007 and 2008. Gas prices were close to $14 per 1,000 cubic feet in July, 2008. In the past six months they have stayed between $3.20 and $4.75.
The drop helped homeowners and businesses pay for heat and energy during the recession, but natural gas is starting to rise again, according to a government survey of utilities and municipal gas providers. Residential prices declined 14 percent from 2008 to 2009, but gas bills swung 5 percent higher last year, according to an estimate from the Energy Information Administration. Benchmark oil drifted lower as investors continued to watch the protests in Egypt. Oil traders are concerned that anti-government violence could eventually affect petroleum shipments through the Suez Canal, although shipments have not been disrupted yet.
West Texas Intermediate crude for March delivery lost 32 cents to settle at $90.54 per barrel on the Nymex. In London, Brent crude lost 58 cents to settle at $101.76 per barrel.
At the pump, gasoline prices increased less than a penny overnight to a national average of $3.116 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 4.3 cents higher than a month ago and 46 cents more expensive than a year ago.
Average gasoline prices were higher in January than they were in January, 2008. A jump in world crude prices since November has pushed up gasoline prices, even though U.S. supplies are at the highest level since March1993, said Tom Kloza, chief oil analyst at OPIS.
In other Nymex trading for March contracts, heating oil lost 1.33 cents to settle at $2.7674 per gallon and gasoline futures gained less than a penny to settle at $2.5034 per gallon.
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