Shale Gas Supply Held Hostage by Oil to Drop by Most in a Year

15-Jul-2015

After four years of record supply, America’s natural gas output is showing signs of weakness as producers retreat amid tumbling oil prices.

Gas production from the seven largest U.S. shale basins will fall 0.6 percent to 45.1 billion cubic feet a day in August from a month earlier, the biggest drop since March 2014, the U.S. Energy Information Administration said Monday in its monthly Drilling Productivity report. EIA estimates have shown supply declines since June.

The government’s forecasts signal the collapse in crude oil prices, which have plunged by about half over the past year, is reverberating in the natural gas market. As drillers shut wells in liquids-rich deposits from North Dakota to Texas, they’re also curtailing gas output from those reservoirs. That may prevent further price declines for gas, which has slid almost a third over the same period.

“Gas is being held captive by oil,” Aaron Calder, senior market analyst at Gelber & Associates in Houston, said by phone Monday.
(By Christine Buurma and Naureen Malik, Bloomberg Business)


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