Oil settles at USD 98.23 , Nymex Natural Gas Declines on Signs U.S. May Enter Recession

Crude oil prices fell on Thursday (February 21) and Natural gas declined , after a US government report showed that the nation`s crude oil supplies last week had risen to levels that surpassed expectations and on signs that the U.S. economy is moving closer to a recession, paring energy demand.

Manufacturing in the Philadelphia area shrank the most in seven years and a measure of the economy's future performance declined for a fourth month. Commercial, industrial and power- generation demand accounts for about 78 percent of U.S. gas use, according to the Energy Department.

Concern over the economy is ``taking away some of the bullish enthusiasm we saw earlier,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago.

Natural gas for March delivery fell 7.4 cents, or 0.8 percent, to settle at $8.891 per million British thermal units at 3:09 p.m. on the New York Mercantile Exchange. It earlier rose as high as $9.05 per million Btu. Futures are 19 percent higher so far this year and 16 percent above a year ago.

Light, sweet crude for April delivery fell USD 1.47 to settle at USD 98.23 a barrel on the New York Mercantile Exchange (NYMEX).

March gasoline futures fell 6.32 cents to settle at USD 2.522 a gallon. The retail gas prices rose 3.3 cents overnight, to a national average of USD 3.086 a gallon.

March heating oil futures fell 1.65 cents to settle at USD 2.7381 a gallon on the NYMEX.

In London, April Brent crude futures fell USD 2.18 to settle at USD 96.24 a barrel on the ICE Futures exchange.

March natural gas futures rose 7.4 cents to settle at USD 8.891 per 1,000 cubic feet.

The Federal Reserve Bank of Philadelphia's general economic index fell more than forecast this month to minus 24, showing the margin by which more firms reported a decrease instead of an increase. That was the lowest figure since February 2001. The Conference Board's index of leading indicators dropped 0.1 percent in January, matching December's decline.

``The stock market is lower and people are kind of wondering if the move in oil was overdone a little bit,'' said Flynn.

Crude oil for April delivery declined after an Energy Department report showed that U.S. inventories rose more than expected last week.

Stockpiles of natural gas fell 172 billion cubic feet to 1.77 trillion cubic feet in the week ended Feb. 15, the Energy Department said today. Analysts had forecast a withdrawal of 173 billion cubic feet, according to the median of 24 estimates compiled by Bloomberg. The five-year average change is a decline of 160 billion cubic feet.