gas prices to rise

This looks promising in the med-long term for RFE, seems they're ramping up production at the right time


Natural gas climbs as Obama announces US energy plan, oil prices edge lower

By Chris Kahn, The Associated Press ? 2 hours ago

NEW YORK, N.Y. ? Natural gas prices climbed Wednesday as President Barack Obama said he wanted the United States to use more of it instead of foreign oil. Colder weather also pushed up prices, as forecasters predicted a cold snap for much of the U.S. in coming weeks.

Natural gas for May delivery rose eight cents to US$4.339 per 1,000 cubic feet in afternoon trading on the New York Mercantile Exchange.

Meanwhile, benchmark crude for May delivery fell 16 cents to US$104.64 per barrel on the Nymex. In London, Brent crude added 15 cents at US$115.11 on the ICE Futures exchange.

In its weekly report on petroleum supplies, the Energy Department said U.S. crude supplies rose by 2.9 million barrels last week. Gasoline supplies fell by 2.7 million barrels.

Natural gas prices rose as Obama announced that he wants to cut U.S. oil imports by a third by 2025. The president touted a string of initiatives, emphasizing that the U.S. could rely more on its own natural gas and biofuels to power vehicles and produce electricity.

Fadel Gheit, an energy analyst with Oppenheimer & Co., said the strategy makes sense: "We have abundance of natural gas in this country and the best technology in the world. We should capitalize on that."

Techniques refined in recent years to extract natural gas from shale deposits have significantly boosted the amount of available gas.

This year the Energy Information Administration doubled its estimate of the amount of natural gas the country has in shale formations, to 827 trillion cubic feet. In all, EIA estimates the U.S. has 2,552 trillion cubic feet of potential natural gas resources, enough to satisfy the nation's annual demand for 110 years. The agency expects its estimates to rise further in coming years because more shale resources are being discovered.

Natural gas prices remain in about the same range they've been in for three years as the recession and a surge in domestic production have kept prices in check. The price of oil, which the U.S. imports primarily from Canada, Saudi Arabia and Mexico, has jumped in that period, rising 27 per cent in last 12 months alone.

Michael Lynch, president of Strategic Energy & Economic Research, said Obama's continued endorsement of natural gas drilling will convince investors to be more bullish about natural gas. But government policies usually don't affect short-term supply or consumption. Most traders are keeping a closer eye on the weather, which is expected to remain unseasonably chilly in April.

"We're expecting snow," said Lynch, who is based in Winchester, Mass.. "Cold weather is going to keep natural gas demand high."

AccuWeather forecasters said Wednesday that chilly weather could linger in northern parts of the U.S. into May or June.

In other Nymex trading for April contracts, heating oil was flat at US$3.0595 per U.S. gallon (3.78 litres) and gasoline added two cents to US$3.0624 a gallon.