BUSINESS

Strong economic reports in U.S. push oil price to near US$100 a barrel

01/26/2012 12:04 EST | Updated 03/27/2012 05:12 EDT
NEW YORK, N.Y. - Crude prices edged higher Thursday after new reports on jobs and manufacturing showed a steadily improving U.S. economy that will need more oil and gas.

Benchmark West Texas Intermediate crude rose 30 cents to finish at US$99.70 a barrel in New York. Brent crude, which is used to price oil imported by U.S. refineries, rose by 98 cents to end at US$110.79 in London.

Crude traded as high as $101.45 a barrel earlier in the session as the U.S. dollar hit a five-week low against the euro and U.S. stocks climbed in early trading on better than expected economic data. But a disappointing report on new-home sales later in the day blunted some initial optimism.

On the positive side, the U.S. Commerce Department said orders for long-lasting, durable goods rose in December and a private survey showed a range of economic indicators got stronger at the end of 2011.

The jobs market appears to be improving, even after a modest increase in unemployment claims last week.

Meanwhile, the price of natural gas dropped for the first time in a week, after the government said U.S. supplies are still well above what's normal for this time of year.

A report from the Energy Information Administration on Thursday showed the United States had 3.1 trillion cubic feet of natural gas in storage — a level that's 21.4 per cent higher than the five-year average.

Natural gas futures fell 12 cents, or 4.5 per cent, to end at US$2.6050 per 1,000 cubic feet in New York.

Natural gas is used for heating and by some utilities to generate electricity. So falling prices should eventually mean lower bills for many consumers.

The price of natural gas had rebounded by about 17 per cent from a 10-year low over the last few days. That followed announcements by major energy companies that they would reduce production.

Chesapeake Energy Corp. and ConocoPhillips said they would cut natural gas production by about 600 million cubic feet per day. And Consol Energy said Thursday that it will set aside plans to drill 23 wells in the gas-rich Marcellus Shale region in the eastern U.S.

But analysts don't think it's enough to significantly reduce the huge stockpiles.

"There's an awful amount of gas," said Gene McGillian, a broker and analyst at Tradition Energy. "We need to see more and more producers make cuts."

U.S. natural gas supplies have grown over the past few years as companies use new techniques to tap vast deposits of petroleum-rich shale.

In other energy trading, heating oil rose three cents to finish at US$3.05 a U.S. gallon (3.79 litres) and gasoline futures rose about a penny to end at US$2.85 a gallon.

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