HOUSTON: US natural gas may be the loser as surging oil prices prompt frackers to step up production from shale fields, according to Goldman Sachs.
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.
The prospect of a flood of new supply has yet to rattle 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 3.1% to US$2.696 per million British thermal units, the highest since May 20.