NEW YORK (AP) — The price of natural gas jumped by nearly 5 percent Monday after government data showed that producers are making good on promises to cut supplies.
Chesapeake Energy Corp., ConocoPhillips and Encana Corp. have each said that they would take some natural gas operations offline this year. They were forced to, in part, because of their own success. U.S. supplies have ballooned to nearly 60 percent above the five-year average, after a wave of new shale drilling delivered more natural gas to the market than people were able to use.
The glut pushed natural gas prices to 10-year lows this month, and some experts say the country may eventually run out of places to put it.
The Energy department's Energy Information Administration reported that the industry's effort to downshift production appears to be making a difference. Overall production in the U.S. came to 82.36 billion cubic feet per day in February, down 0.8 percent from January. Natural gas production was still 9.3 percent higher than a year ago, but analysts said any production drop was a promising sign.
On Monday natural gas futures rose 9.9 cents to end the day at $2.285 per 1,000 cubic feet, the highest since March 21.
Analyst Stephen Schork noted, however, that supplies continue to grow this spring, and that could still push storage facilities to full capacity later this year.
Meanwhile, oil prices dropped slightly on Monday with concerns of growing economic troubles in Europe.
Benchmark U.S. crude lost 6 cents to end at $104.87 per barrel in New York. Brent crude, which is used to price oil imported into the U.S., lost 36 cents to end at $119.47 per barrel in London.
Oil prices dropped after Spain said its economy has fallen into recession. It is one more sign of economic weakness in Europe, which consumes about 18 percent of the world's oil. Analysts also worry that Europe's growing debts could affect other regions, including the U.S.
"If Spain's in a recession, we could see a replay of the great drama that we saw last year" in Europe, PFGBest analyst Phil Flynn said. "Spain may need a bailout, and that creates worries about the European economy."
The U.S. government also said consumer spending grew at a slower pace last month. Consumer spending accounts for 70 percent of economic growth, and any cutback could crimp the economic recovery.
At the pump, retail gasoline prices fell by less than a penny to a national average of $3.82 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped by 12 cents since peaking this year at $3.936 per gallon earlier this month. It's11.5 cents cheaper than the same time last year.
In other energy trading, heating oil was flat, finishing at $3.1834 per gallon, while gasoline futures fell by 2.18 cents to end at $3.1844 per gallon.