The price of U.S. natural gas jumped to the highest level since February as companies shut down production across the country.
Natural gas futures rose 2.2 cents to $2.487 per 1,000 cubic feet on Thursday, extending a recent surge. The price has soared 30.4 percent since hitting a 10-year low on April 19.
The run-up could marginally boost energy costs for power plants, factories and other industrial consumers that are big users of natural gas. But the price is still about 40 percent cheaper than a year ago, and the recent jump isn't expected to affect residential electricity bills this summer.
Until recently, natural gas prices had been in a free fall. A relatively warm winter had cut heating demand in the U.S. and natural gas supplies grew so rapidly that analysts warned that the industry could run out of places to put it.
Major producers such as Chesapeake Energy Corp., Encana Corp. and ConocoPhillips responded by shutting down some of their operations. Across the country, the number of active natural gas drilling rigs fell 40 percent from October to March.
Supplies still grew last week, according to the government's latest report. But the increase was smaller than analysts expected.
"Producers are finally pulling back" on production, independent trader and analyst Stephen Schork said. "It's making a difference."
Meanwhile, oil prices were mixed after falling most of the week. Benchmark U.S. crude increased by 27 cents to end the day at $97.08 per barrel in New York while Brent crude fell by 47 cents to finish at $112.73 per barrel in London.
Oil has been mostly declining since April as some European countries fell into recession and the U.S. reported disappointing jobs growth. Benchmark U.S. oil has fallen 5.8 percent since April. Brent crude, which sets the price for oil imported into the U.S., has dropped by 8.3 percent.
Analysts say oil prices should also keep falling this summer if world oil supplies grow as expected. OPEC increased oil production by 320,000 barrels per day in April, according to Platts, the energy-information arm of McGraw-Hill Cos. OPEC's biggest producer, Saudi Arabia, plans to crank up production even further in an effort to push oil prices lower.
Declining oil prices could take some pressure off a world economy that's struggling to grow. The price of U.S. gasoline, which follows oil has dropped by nearly 20 cents since peaking on April 6 at $3.936 per gallon. The decline amounts to savings of about $2 to $3 per fill-up, enough to cut America's gasoline spending by $73.1 million per day.
In other futures trading, heating oil lost 1.57 cents to end at $2.9834 per gallon and wholesale gasoline fell by 1.39 cents to finish at $3.0102 per gallon.
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