Natural gas prices fall after report says supplies still high despite frigid weather

Natural gas prices tumbled nearly 3 percent after the government said supplies are still higher than average despite a rash of snowstorms that blanketed the East Coast during the past few weeks.

Natural gas is used to both heat homes and power electric generators, and supplies generally drop in the winter as homeowners crank up the heat.

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The Energy Information Administration said natural gas stores did fall last week. However the remaining supply of 2.03 trillion cubic feet is still nearly 3 percent higher than the five-year average.

With the winter more than half over, analyst Stephen Schork said natural gas prices were headed lower.

“We’re at the end of the season,” he said. “And there’s an assumption out there that we have a lot of storage capacity, a lot of untapped wells that could easily be brought online.”

The EIA said in a separate report that supplies of distillates, including diesel fuel and heating oil, fell almost twice as much as expected last week. The drop in supplies was due in part to a plunge in imports of those fuels.

Crude inventories rose by 3.1 million barrels to 334.5 million barrels, which is 5.4 percent below year-ago levels, according to the EIA.

Oil prices held onto increases from earlier in the day as the dollar fell. Oil barrels are priced in U.S. currency, and they tend to go up in price as the dollar weakens and makes oil easier to buy for investors holding foreign currency.

Benchmark crude for March delivery added $1 at $78.33 a barrel on the New York Mercantile Exchange. In London, Brent crude increased 68 cents at $76.95 a barrel on the ICE futures exchange.

At the pump, retail gas prices rose overnight for the first time in nearly two weeks to a national average of $2.614 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is still 12.6 cents cheaper than a month ago. It’s 65.7 cents more expensive than the same time last year.

In other Nymex trading in March contracts, heating oil added 2.73 cents to $2.034 a gallon, and gasoline rose 2.96 cents to $2.0367 a gallon. Natural gas lost 13.5 cents to $5.251 per 1,000 cubic feet.

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