Natural Gas, Oil Prices Lower
NEW YORK (AP) _ Natural gas prices were lower Thursday for the first time in a week as word moved through the market that several utilities were planning to switch from gas to oil for generating electricity.
Natural gas had risen more than 50 cents per 1,000 cubic feet in the past week before dropping 12.9 cents on Thursday to settle at $2.464 on the New York Mercantile Exchange.
The October contract expired on Wednesday and attention shifted Thursday to the November contract, a change that frequently puts downward pressure on prices.
Many utilities that run generators on natural gas can easily switch their burners to residual fuel oil when gas prices rise. Indications Thursday that utilities in the Northeast were making the change helped push natural gas prices down, said Howard Rennell, energy analyst at Cargill Investor Services.
The runup in recent days has been inspired by concerns over short supplies this winter resulting from low production earlier in the year when prices were about $1 and facilities knocked out by Hurricane Andrew. Forecasts for a colder-than-normal winter have also pushed prices higher.
Light sweet crude oil for delivery in November settled at $21.79 per barrel, down 21 cents, at the New York Mercantile Exchange. Crude dropped after the Iranian oil minister said his country would increase production by about 400,000 barrels a day.
The Iranians rejected last week’s OPEC agreement to hold production steady during the winter to push prices slightly higher. The Iranians said they would pump more to meet demand, but would not flood the market.
Refined products were also lower. Unleaded gasoline for delivery in October settled 0.21 cent lower at 58.87 cents a gallon. Home heating oil for delivery in October settled at 63.26 cents a gallon, down 0.70 cent.
In London, North Sea Brent Blend crude oil for delivery in November settled at $21.79 per barrel, down 21 cents, at the International Petroleum Exchange. At the New York Mercantile Exchange, lower-grade sour crude for delivery in November settled at $19.19 per barrel, down 21 cents.