re: gas prices, page-18

re: gas prices

Feb. 9 Natural gas futures rose for a fourth day in New York, the longest such streak in three months, on speculation fuel use will increase because of the Obama administration’s economic stimulus package.

Treasury Secretary Timothy Geithner may announce details of the economic rescue plan, now being debated in the Senate, tomorrow in Washington. Industrial and power generation consumption of gas account for 59 percent of U.S. usage.

“Gas is getting a boost from the stimulus package,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “We’re going to get some sort of package. There will be a run up” in prices.

Natural gas for March delivery rose 3.1 cents, or 0.7 percent, to $4.805 per million British thermal units at 12:05 a.m. on the New York Mercantile Exchange. The previous time gas futures gained over four consecutive days was in late October and early November. Prices have dropped 14 percent this year and are down 65 percent from the 2008 high of $13.694 on July 2.

Geithner delayed announcing details of the recovery plan as officials debated proposals aimed at addressing the toxic debt clogging banks’ balance sheets.

“While the economy is still extremely weak, recent prices are cutting deeply into future production projects in natural gas,” Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut, said in a note today. “Existing prices could also bring renewed interest from industrial end-users.”

Baker Hughes Inc. said the number of natural gas rigs operating in the week ended Feb. 6 fell by 46, or 4 percent, to 1,104, the lowest since the week ended March 11, 2005. The count was down 31 percent from a peak of 1,606 reached on Aug. 29.

EOG Resources Inc. expects its gas production to drop 1 percent this year, and said Feb. 5 that its exploration rigs would drop to 45 from 73 in 2008.

Devon Energy Corp., the largest independent oil and gas producer, said it plans to spend about $3.5 billion to find and develop new gas deposits, less than half the $8.5 billion expended in 2008.

U.S. gas production may expand 0.7 percent this year, the Energy Department said in its monthly Short-Term Energy Outlook on Jan. 13. Output rose 5.9 percent in 2008, according to department estimates.