The Associated Press
NEW YORK (AP) - Natural gas prices slumped to their lowest level in seven years Thursday after the 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 4.5 cents to $2.865 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 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, according to auto club AAA, Wright Express and Oil Price InformationService. 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.
Oil remains above $70, largely because it is bought in the U.S. dollar. That means when the 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.
In other Nymex trading, gasoline for September delivery increased 1.49 cents to $1.9975 a gallon and heating oil added less than a penny to $1.8615 a gallon. In London, Brent crude climbed 49 cents to $72.14.
Associated Press Writers Carlo Piovano in London and Eileen Ng in Kuala Lumpur contributed to this report.