The price of natural gas futures rose Tuesday for the third straight trading day, adding three cents to finish at US$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 rose 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.
Meanwhile, oil prices fell Tuesday as concerns about Europe's beleaguered economy focused again on Greece's massive debt and looming default. 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. 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.
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 per cent 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."
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 the U.S., retail gasoline prices were flat Tuesday at a national average of $3.38 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 15 cents higher than a month ago and 27 cents more than a year ago.
Drivers in the U.S. continue to buy less gasoline, according to MasterCard SpendingPulse. The report released Tuesday is based on credit card purchases as of Jan. 20. It estimates that the four-week average gasoline demand fell by nearly 4 per cent when compared with the same period last year. Gasoline consumption has been dropping for 11 months straight, according to MasterCard SpendingPulse.
In Canada, the price averaged C$1.216 per litre, up from $1.171 a month ago, according to GasBuddy.com.
In other energy trading, heating oil rose a penny to end at US$3.02 per gallon and gasoline futures rose about three cents to finish at $2.81 per gallon.
Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAPSuggest a correction