DENVER (AP) ? Natural gas prices plummeted nearly 8 percent Tuesday after a government report said U.S. production hit a record high, as weak demand during a mild winter kept supplies bulging.
Natural gas dropped by 21 cents to $2.51 per 1,000 cubic feet in afternoon trading in New York. The price was 19 cents above the decade low it hit 12 days ago. Prices had been rising after several gas companies said they would cut back on production. But it wasn't enough to convince traders that the nation's gas supplies would decline significantly.
In other energy trading, oil prices moved between gains and losses as optimism about a new European treaty aimed at resolving the crippling debt crisis there was tempered by weak U.S. economic data.
Investors hope that the European agreement can help stabilize the region's economy by curbing overspending, jump-starting economic growth and creating jobs. That will mean more demand for oil.
But in the U.S. a private survey found that consumer confidence dropped in January after rising in the previous two months. Also home prices fell in November, indicating that the anemic housing market probably hasn't hit bottom yet.
Benchmark oil fell 3 cents to $98.75 per barrel in New York after hitting $101.29 per barrel earlier in the day. Brent crude rose 43 cents to $111.18 per barrel in London.
The Energy Information Administration said Monday that natural gas production in the lower 48 states totaled 72.61 billion cubic feet per day in November, up 2.4 percent from October. November production set a fifth consecutive monthly record, Tradition Energy analyst Addison Armstrong said in an email. Natural gas inventories remain well above the average level for this time of year.
Natural gas supplies have ballooned recently as companies tap vast reserves in shale formations holding oil and gas. Some estimates say the U.S. has enough natural gas to meet its needs for the next century.
The combination of increased production and huge supplies is likely to keep natural gas prices low for some time to come. That's good news for consumers, whose heating and electric bills should fall eventually. Natural gas is used to heat about one-half of U.S. homes and to generate about a quarter of the nation's electricity.
Heating oil rose 1 cent to $3.06 per gallon and gasoline futures rose 2 cents to $2.89 per gallon.
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