Natural Gas Prices Soar as Winter Hits US Friday December 9, 2:47 am ET By En-Lai Yeoh, Associated Press Writer Natural Gas Prices Soar to New Highs as Winter Weather Hits US; Crude, Heating Oil Also Up
SINGAPORE (AP) -- Natural gas prices rose to a new record Friday as a winter storm hit the northern United States, while crude and heating oil prices also gained amid expectations for strong demand.
Natural gas for January on the New York Mercantile Exchange reached an all-time intraday high of $15.52 per 1,000 cubic feet in Asian electronic trade midmorning in Singapore, double its price from a year ago. The contract had closed at $14.994 overnight, also a new record.
Nymex crude was also up. Light, sweet crude oil for January delivery surged 74 cents to $61.40 a barrel in midafternoon electronic trading in Asia after closing up nearly $1.50 overnight at $60.66.
Although nearly $10 lower than its all-time high of $70.85 a barrel set Sept. 30, oil prices are more than 40 percent higher than a year ago.
On London's ICE Futures, January Brent was up 78 cents to $59.45 a barrel.
"The price rise is all based on forecasts of cold weather to hit large portions of the United States," said Victor Shum, a Singapore-based analyst at Texas-headquartered energy consultants Purvin & Gertz. "The weather affects natural gas, but the (trading) psychology also affects the oil market."
In other Nymex prices, heating oil was up by more than 2 cents to $1.8095 a gallon and gasoline was also up by a similar margin to $1.6551 a gallon.
Forecasters AccuWeather said a winter storm will dump a "substantial amount" of snow along the northeastern corridor of the United States, which consumes around 80 percent of total heating oil used in the U.S., the world's largest energy user.
The U.S. Energy Department recently predicted that households heating primarily with natural gas can expect to spend about 50 percent more this winter.
With several more months of wintry conditions expected, analysts also predicted the early jump in prices could provide a higher base.
"Winter has a long way to go," said Shum. "The market psychology supports a rather high price. This is only December, the anticipation of the continuation of colder weather will provide a high price floor."
Oil cartel OPEC meets Monday in Kuwait, where it will dictate its pricing policy for the new year. Most analysts are not expecting OPEC to cut output when it meets. Typically, the organization considers cutting output when stocks start building and prices fall.
Venezuela, one of the cartel's more hawkish members, said it would defend the price of its oil, but did not specify at what level it would be comfortable with.
"We will propose all of the measures necessary to defend the price of our oil. As a producing nation we believe that oil has a just price," said Venezuelan oil minister Rafael Ramirez.
Energy markets are fixated on weather patterns in the United States this winter, where warmer conditions likely mean lower heating fuel consumption, lower demand and ultimately, lower prices.
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