Natural gas prices fall to 10-year low on supply concerns
Natural gas prices fell again in morning trading Tuesday amid doubts that a huge surplus of the fuel will be depleted anytime soon.
Natural gas futures fell four cents to US$2.18 per 1,000 cubic feet after dropping five cents on Monday. That's a 10-year low and half of what natural gas was fetching back in July.
Oversupply and mild winter weather have contributed to the plunge.
Any money that consumers are saving on natural gas may be going into the gasolene tank.
The national average for regular gasolene in the United States is US$3.90 per gallon. It's risen 17 cents in March and 62 cents since January 1.
A private research group said Tuesday that high pump prices contributed to a decline in consumer confidence in March.
Meanwhile, oil prices rose a day after Federal Reserve Chairman Ben Bernanke suggested the central bank will continue its efforts to help spur US job creation and economic growth.
Benchmark US crude oil rose 25 cents to US$107.28 per barrel at mid-morning Tuesday.
In London, Brent crude for May delivery fell five cents to US$125.60 per barrel on the ICE Futures exchange.
Oil prices remain high because of ongoing tension over Iran's nuclear programme.
Oil has jumped from US$75 a barrel in October because of concern that a military strike by Israel or the US against Iran's nuclear facilities would disrupt global crude supplies.
Natural gas supplies are currently more than 50 per cent above the five-year average for this time of year.
That's due to a boom in production in Pennsylvania, Ohio, Texas and others states. Warmer than usual temperatures this winter also meant homeowners used less natural gas for heating than in years past.
Shiyang Wang, an analyst at Barclays Bank PLC, said in a research report that the market has turned its attention to whether the surplus gas in storage could be absorbed by hot summer weather and utilities opting to use cheap gas for power generation instead of coal.
If storage is still abundant as summer ends, prices could remain low in October and November, the analyst said.