By the OGJ Online Staff
HOUSTON, July 20 -- Natural gas prices dipped below $3/Mcf Thursday as oil futures also continued a downward spiral on the New York Mercantile Exchange.
The August contract for natural gas dropped 14.8¢ to $2.94/Mcf on the NYMEX. The last time a near-term natural gas contract closed below $3/Mcf was for April 2000 delivery (OGJ Online, July 17, 2001).
"Natural gas price momentum has not really been affected by temperatures that, on average, have been essentially normal this summer," said Robert Morris, industry analyst for Salomon Smith Barney Inc., in his weekly exploration and production report. Moreover, he said, no prolonged periods of above normal temperatures are expected during the rest of the summer season.
Meanwhile, Morris said, US gas production during the second quarter is projected to be up 0.5% from the first quarter of this year and 3.4% above year-ago levels.
The American Gas Association earlier reported that natural gas injections into US underground storage facilities totaled 110 bcf last week, the same as the previous week and up from injections of 70 bcf during the same period a year ago.
Those latest numbers included a one-time correction of 14 bcf. But even when adjusted to 96 bcf, Morris said, US gas storage levels now exceed 2 tcf and are 239 bcf more than at the same time last year.
The August contract for benchmark US light, sweet crudes lost 19¢ to $24.70/bbl Thursday on the NYMEX, while the September contract was down 15¢ to $24.78/bbl. However, both contracts rebounded in after-hours electronic trading to $24.90/bbl and $24.95/bbl, respectively.
Unleaded gasoline for August delivery fell by 1.62¢ to 70.21¢/gal, while home heating oil for the same month was down 0.45¢ to 66.8¢/gal.
In London, the September contract North Sea Brent crude briefly broke support at $24/bbl before settling at $24.05/bbl, down 17¢ for the day on the International Petroleum Exchange. Brokers predicted prices could drop below $23/bbl in that bearish market before the end of summer.
The August natural gas contract jumped by 17.5¢ to the equivalent of $2.84/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes gained 14¢ to $22.78/bbl Thursday.