Shale drilling reductions may leave natural gas shorts

Getty Images

Getty Images

A recent decrease in the drilling for United States oil is threatening to leave the natural gas market short. With the decline in oil prices, strategist are predicting that associated gas may decline by 1 billion cubic feet a day. Associated gas comes from oil wells alongside crude. Forecast by the U.S. Energy Information Administration are already approximating shale gas is going to drop in October. This will be the fourth straight month of decline in shale gas production.

Source: EIA/Baker Hughes

Source: EIA/Baker Hughes

Unfortunately, due to these record breaking declines, crude oil producers have to decrease their production within the southern states. To begin full production of crude would only hurt the market further due to the current excess of supply. This would lower prices in a market where United States oil is already half the value it was in the past year.

Futures for West Texas Intermediate have made small gains, settling at $47.15 on the NYME. Since 2014 gas futures have seen a 41% decline settling at 2.66 per million BTU. Gas drilling rigs have also declined by 45%, a record low.


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