(Bloomberg) -- U.S. natural gas may be the loser as surging oil prices prompt frackers to step up production from shale fields, according to Goldman Sachs Group Inc.
The knock-on effect of pumping more oil is additional gas flowing from wells as a byproduct in a market already saturated with the power-plant and furnace fuel, analysts led by New York-based Samantha Dart said in a note.
“A sustained increase in crude prices could end up having a bearish impact on natural gas balances,” the analysts wrote.
EQT Corp., the biggest American gas producer, was whipsawed, dropping as much as 4.6% after earlier rising as much as 7.9%. Cabot Oil & Gas Cortp. dropped as much as 4.9%. Analysts at Scotiabank cut forecasts for companies with “gassier” assets or limited hedge books.
The prospect of a flood of new supply has yet to rattle natural gas traders, however. Gas rallied with crude on Monday after Saudi Arabia's oil production was cut in half due to a devastating drone attack. New York-traded gas futures rose as much as 3.3% to $2.70 per million British thermal units, the highest since April 10 before trading up 2.2% at 11:56 a.m.
To contact the reporter on this story: Kevin Crowley in Houston at kcrowley1@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, Christine Buurma
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