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Crude falls below $99 a barrel over European economic concerns

The Associated Press

1/24/2012

NEW YORK  — Oil prices fell Tuesday as concerns about Europe's beleaguered economy focused again on Greece's massive debt.

Greece's private creditors warned that European leaders were putting the region's financial stability at further risk by not committing enough money to the crisis.

Benchmark crude fell 63 cents to end at $98.95 per barrel in New York, after tapping a day low of $98.25. Brent crude, which is used to price foreign oil varieties that are imported by U.S. refineries, fell 55 cents to finish at $110.03 per barrel in London.

Losses in oil came the U.S. dollar strengthened against the euro on worries that Greece might not reach a deal with its creditors.

Meanwhile, U.S. natural gas prices are rebounding from 10-year lows as producers cut back and colder weather forces homeowners to turn up the heat.

The price of natural gas futures rose Tuesday for the third straight trading day, adding 3 cents to finish at $2.55 per 1,000 cubic feet.

The futures contract dropped as low as $2.32 on Thursday, the lowest since Feb. 25, 2002.Natural gas has risen this week after one of the largest producers, Chesapeake Energy Corp., announced it would slow down production this year. And weather forecasts showed a chilly mix of rain and snow from the Southwest to the Great Lakes. More than half of homeowners use natural gas for heat, and investors are betting they'll need to crank up furnaces as temperatures drop.

The price of natural gas has plunged as drillers expanded their reach in North America, tapping vast underground shale layers that are rich in gas and oil. Supplies in storage have grown well beyond the five-year average for this time of year. Prices are about 44 percent lower than at the same time last year, and experts say U.S. supplies will continue to test the country's storage capacity because of weak demand.

"You may reach a point this summer that you wouldn't get it all into storage," independent natural gas analyst Stephen Smith said. "If that happens, you're going to see an extreme weakness in natural gas prices."

U.S. homeowners should eventually see lower heating bills, and in some cases lower electricity bills, as more utilities use cheap natural gas to run generators.

In other energy trading, heating oil rose a penny to end at $3.02 per gallon and gasoline futures rose about 3 cents to finish at $2.81 per gallon.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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JB Hunt