Oil Surges to $110 While Natural Gas Prices Plunge
Oil prices climbed to $110.44 per barrel while natural gas dropped to $4.057 per 1,000 cubic feet on Thursday, April 7, 2011.
The average price for oil rose to 27 percent last month compared to March last year, even though U.S. oil supplies were increasing- the first time oil prices reached such level since September 2008, making it a 30-month high.
In NYMEX, benchmark West Texas Intermediate crude oil for May delivery went from $1.47 to $110.30 per barrel. In London, Brent crude gained 27 cents at $122.20 per barrel on the ICE Futures exchange.
The gains came after a 7.1-magnitude earthquake occurred around 10:30 a.m. ET in Japan.
Meanwhile, natural gas gave up 8.9 cents and dropped by 5 percent compared to March prices last year.
The natural gas contract for May delivery lost 8.9 cents at $4.057 per 1,000 cubic feet in NYMEX. Earlier, natural gas lost as much as 11 cents, or 2.6 percent.
The increase in oil prices can be attributed to the increased world demand of China and other emerging economies amidst political spasms in North Africa and the Middle East.
On the other hand, natural gas prices declined due to a production boom that injected a large surplus into US supplies. The emergence of shale gas drilling in the US kept natural gas storage facilities full but the lack of infrastructure to export it left the country with too much supply.
Analyst Jim Ritterbusch said that in 2008, oil and natural gas prices were in a lockstep but today, there’s no relationship between them anymore.