NEW YORK — Natural gas prices set an intraday record of $8.80 per 1,000 cubic feet on Wednesday before settling at $8.49, as the latest U.S. weather forecasts showed even colder temperatures arriving soon.
Weekly data released Wednesday by the American Gas Association showed a draw of 73 billion cubic feet from U.S. inventories of natural gas; the decline was not as severe as some traders had feared, but nonetheless it comes at a time when supplies are considerably lower than year-ago levels.
Wednesday's spike in natural gas was a reversal from Tuesday, when predictions of milder temperatures helped moderate prices.
Crude and products also finished higher on the New York Mercantile Exchange on Wednesday.
Crude oil for January delivery rose 32 cents to $29.85 per barrel, January heating oil jumped 3.5 cents to $1.01 a gallon and nearby unleaded gasoline gained nearly 2 cents to 78.21 cents a gallon.
In London, Brent crude from the North Sea gained 22 cents to $28.01 per barrel.
Data released by the American Petroleum Institute after markets closed on Tuesday showed that crude oil inventories in the United States declined by 3.7 million barrels for the week ending Dec. 1, a sign that prices were likely to inch higher on Wednesday.
Analysts said Wednesday's comeback in prices for crude and products reflected an across-the-board technical correction in a market many of them considered oversold.
Heating oil prices were also supported by the reports of colder weather on the way.
Iraq's leadership postponed a decision Wednesday on whether to accept the U.N.'s latest extension of the oil-for-food program, the official Iraqi News Agency reported. It didn't say how long the leadership will take to decide on the issue.
Iraq halted exports after Nov. 30 after the U.N. rejected its December oil prices as below market value and buyers refused to pay an illegal surcharge demanded by Baghdad.
U.N. oil experts and Iraq agreed to resume talks Thursday for Iraq's December prices.
Natural gas prices are up nearly 400 percent compared to a year ago. Analysts attribute the price spike to low inventories as the winter heating season is in full swing. According to the AGA, inventories are 17 percent below where they were a year ago and 12 percent below the five-year average.
For the week of Dec. 1, the AGA said there was 2,429 billion cubic feet of working gas in storage, compared with 2,932 billion cubic feet a year ago.
Storage is at 74 percent capacity. The five-year average for this week is 2,751 Bcf, the AGA said.
Natural gas is in short supply because it has become a year-round fuel, used to generate the electricity that powers air conditioners and computers, as well as for winter heating. But the rise in usage has not been accompanied by an equal growth in capacity.
Recent forecasts project severe cold starting in the Plains states and spreading to the Midwest and then the East Coast. Some of those forecasts also call for the possibility of a major blizzard with heavy snow and high winds.