NEW YORK (AP) — The price of natural gas jumped Thursday after a major producer said it is aggressively cutting production.
Chesapeake Energy Corp. told investors its production cuts are "actually higher" than the minimum of 500 million cubic feet per day it announced in January.
Investor relations chief Jeffrey Mobley said at an energy conference in Colorado that the company will push many of its natural gas operations to the sidelines until "what is hopefully a higher gas price environment" in the future. If prices remain weak, Chesapeake may limit natural gas production by up to a billion cubic feet per day.
Natural gas futures climbed by 4 cents, or 1.4 percent, to $2.48 per 1,000 cubic feet in New York. Prices surged by more than 5 percent earlier in the day after Mobley suggested that Chesapeake was increasing the production cuts beyond what was previously announced in January. The company clarified the statement later in the day.
Analysts said Thursday's announcement by Chesapeake shows that energy companies are watching the market closely and will aggressively manage supplies to push prices higher.
"Perhaps this won't be the end," PFGBest analyst Phil Flynn said. "If prices stay low, maybe they'll drop production even more."
The government reported earlier in the day that natural gas supplies fell last week by 78 billion cubic feet. That was less than analysts expected, and supply levels remain nearly 33 percent higher than the five-year average.
Meanwhile, benchmark crude prices rose by $1.13 to $99.84 per barrel in New York. Brent crude rose by $1.11 to $118.31 per barrel in London. Prices increased after Greece agreed on new spending cuts and other austerity measures that were necessary to receive an international bailout. The deal eased concerns of bank failures that could impact Europe's economy and reduce petroleum demand.
The U.S. also reported that the number of people seeking unemployment benefits fell to near a four-year low last week, suggesting that the job market is gaining strength. Energy demand tends to rise as the economy creates jobs and more people enter the daily commute.
Retail gasoline prices rose by less than a penny to a national average of $3.49 per 1,000 cubic feet, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is about 12 cents higher than it was a month ago and 37 cents higher than a year ago.
In other energy trading, heating oil rose 2 cents to $3.21 per gallon and gasoline futures rose by 3 cents to $3 per gallon.
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