NEW YORK — Natural gas prices slumped to their lowest level in seven years Thursday after the U.S. government reported that salt caverns, aquifers and other underground areas where it is stored are filling up.
Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.
Natural gas tumbled 6.7 cents to settle at US$2.843 per 1,000 cubic feet.
The price dropped as low as $2.692 per 1,000 cubic feet earlier in the day, a price not seen since Aug. 7, 2002. The contract is scheduled to end Thursday, however, and most of the trading already has switched to the October contract that gave up 4.6 cents to trade at $3.248.
Meanwhile, crude and gasoline futures were tugged higher as equities markets rose and the dollar fell among other major currencies.
Benchmark crude for October delivery added $1.06 to settle at $72.49 a barrel on the New York Mercantile Exchange.
Still, oil prices have been tumbling since they touched $75 a barrel on Tuesday, and analysts said they expect it will fall further as the summer driving season ends in a few weeks.
Retail gas prices peaked in late June in the United States at around $2.69 per gallon and have been falling slowly since, giving consumers a bit of a break in the tough economy.
Gas prices gave up two-tenths of a penny to $2.62 a gallon or the equivalent of about 69.3 cents per litre, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular gasoline is 11.5 cents more expensive than last month, but it’s $1.047 cheaper than the same time last year.
In Canada, the price of gas averaged C$1.025 per litre, up from 97.8 cents per litre a month ago, but well of the $1.303 per litre at this time last year, according to price-watching website GasBuddy.com.
Oil remains above US$70, largely because it is priced in U.S. dollars.
That means when the U.S. dollar falls, like it did Thursday, investors can get more crude for less money. Crude supplies grow this week, however, and they remain well above seasonal norms.
“It’s getting harder and harder to justify it at these prices,” PFGBest analyst Phil Flynn said.
Natural gas prices plunged early in the day when the Energy Information Administration reported that natural gas placed into storage surged again.
There is so much natural gas in storage, it has begun to test the country’s storage capacity. But EIA economist Jose Villar told The Associated Press that storage facilities have added about 100 billion cubic feet of extra space, giving suppliers more places to put it. The EIA will include details of the added capacity in a report to be published in the next few weeks, Villar said.