NEW YORK — Natural gas prices tumbled to a 10-year low Thursday after a surprising jump in U.S. supplies.
The futures price dropped sharply in New York after the government reported that natural gas inventories expanded well beyond what analysts expected. The country’s total supply grew by 57 billion cubic feet last week to a level that’s now 59 percent above the five-year average.
There’s enough gas in storage to supply all the country’s needs for more than a month, and analysts say storage facilities across the U.S. will be pushed close to capacity in coming months.
“We’ll be testing the top,” energy analyst Steve Smith said.
The U.S has enjoyed a bounty of natural gas for the past few years thanks to advances in well drilling that have allowed energy companies to tap vast, petroleum-soaked layers of shale rock. The boom in production wasn’t as noticeable at first, Smith said, because of unseasonably warm summers and cold winters forced homeowners to use more gas.
“All of a sudden, after a mild winter, the glut has been visible for all to see,” Smith said.
Natural gas futures plunged by 13 cents, or 5.7 percent, to $2.15 per 1,000 cubic feet in Thursday afternoon trading.
As America’s gas supply grows this summer, the industry will be looking for ways to push levels back down and prices back up. Major natural gas producers such as Chesapeake Energy Corp. and ConocoPhillips already have slowed down the flow of gas from their fields. Storage owners and pipeline operators also are expected to accept fewer shipments as they run out of room. And utilities likely will increase their use of natural gas to run power generators, accelerating a shift away from coal power that is building steam.
Oil prices also fell Thursday on reports that the U.S. and Europe are considering a release of emergency supplies. Benchmark U.S. crude fell $2.67, or 2.5 percent, to $102.74 per barrel in New York. Brent crude lost $1.71 to $122.45 per barrel in London.
France’s prime minister said Thursday that there’s a “good chance” that the U.S. and Europe will agree to release some of their oil reserves. The White House has been mum about any future plans for the nation’s Strategic Petroleum Reserve.
Meanwhile the price of retail gasoline rose by a penny to a national average of $3.921 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline remains at the highest price ever for this time of year, and analysts expect the national average to peak as high as $4.25 per gallon. Pump prices are already higher than $4 per gallon in 10 states and Washington D.C.
In other energy trading, heating oil fell 5 cents to $3.17 per gallon and gasoline futures were unchanged at $3.39 per gallon.