Gas highest in price usa

Natural gas futures surge to highest price since March

By BRAD FOSS Associated Press

Tuesday, December 9, 2003

Washington -- Natural gas futures roared upward Monday, settling at a nine-month high as traders and analysts confessed disbelief at the 40% run-up the past week.

Natural gas for January delivery finished the day at $6.90 per 1,000 cubic feet, up 76.7 cents, or 12.5% on the New York Mercantile Exchange. The last time natural gas futures closed at this level was March 7, when the price was $6.99 per 1,000 cubic feet.

Phil Flynn, an analyst at Alaron Trading in Chicago, said the surge in natural gas prices was "really incredible," given that winter is still officially two weeks away.

Prices began their rapid ascent early last week, when colder weather arrived in many parts of the country. They were propelled even higher by a government report showing a larger-than-expected weekly decline in the nation's underground inventories.

Flynn pointed to factors other than the weather, citing a reported increase in U.S. manufacturing activity and the precipitous drop in the value of the dollar this year.

Last week, the Institute for Supply Management reported that the manufacturing sector, which uses natural gas as a raw material and a power source, expanded at its fastest rate in nearly two decades. The dollar, meanwhile, stands at an 11-year low against the pound.

"The manufacturers can afford to pay a much higher price for energy to create their goods than they could in the past," Flynn said, because demand for their American-made products overseas is strong and the currency exchange rate is so favorable.

But Mike Fitzpatrick, a trader at Fimat USA in New York, said the recent run-up in natural gas prices is more a function of technical trading than any imbalance between supply and demand.

He said speculative traders who had expected prices to drop sharply this time of year were caught off guard last week.

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