THE price of natural gas dropped back to near a 10-year low yesterday after Exxon Mobil and other energy companies declined to cut production.
In other energy trading, the price of benchmark oil was lower. West Texas Intermediate crude fell 87 cents to end at US$97.61 a barrel in New York. Brent crude rose by 58 cents to finish at US$111.56 a barrel in London.
Prices slipped after economic reports showed that the US crude supplies rose last week and energy demand remains weak.
The Energy Department said oil and gasoline demand dropped last week while supplies grew. At the same time, a trade group reported that manufacturing activity in the US rose in January at the fastest pace in seven months, implying more demand for oil in the months ahead.
Exxon, America's biggest natural gas producer, has led a push by major industry players into US gas drilling over the past few years that has boosted production to the highest levels ever. Supplies in storage are well above average, and some experts estimate the nation has enough natural gas to meet its needs for a century.
Investors hoped that Exxon would follow smaller competitors like Chesapeake Energy and shut down some natural gas rigs. But when it released its quarterly and annual earnings results Tuesday, Exxon said it hasn't pulled back.
"We remain bullish on the future of natural gas as an energy source," Exxon investor relations chief David Rosenthal said.
The company has started to shift its focus to developing more oil and other liquid hydrocarbons in the US, but "we have not curtailed any gas production," Rosenthal said.
The price of natural gas fell 12 cents, or nearly 5 percent, to finish at US$2.38 per 1,000 cubic feet in New York yesterday. That follows an 8 percent drop on Tuesday. Natural gas hit a 10-year low of US$2.32 per 1,000 cubic feet on Jan. 19. The price rose briefly, after Chesapeake and other companies said they would cut natural gas production. It slid back as investors lost faith that the reductions would significantly impact supplies and mild winter weather persisted, keeping demand weak.
Independent energy analyst Jim Ritterbusch said traders have been looking for signs that other producers will do more to shrink America's huge natural gas surplus. It doesn't appear that they're willing - or able - to do so.
"The market is craving news about production cuts or colder weather" that would force homeowners to crank up the heat, he said. "It's not getting it."
A sustained decline in natural gas prices will benefit the US economy by reducing heating and electricity costs for many homeowners and businesses. More than half of US residences use natural gas for heat. And power companies are increasingly turning from coal to cheaper, cleaner natural gas to run generators.
In other trading on the New York Mercantile Exchange, heating oil lost a penny to finish at US$3.05 per gallon. Gasoline futures were virtually unchanged at US$2.89 per gallon.