NEW YORK (AP) — Shares of several energy companies rose Tuesday after an analyst predicted that oil market fundamentals will support increased oil shale production without affecting prices.
Oil prices were also higher, with benchmark crude rising $1.16 to $97.42 a barrel in New York.
Alliance Bernstein Research analyst Bob Brackett told clients in a research note that the oil market can handle the additional supply much better than the natural gas market did this year.
Natural gas prices dropped to the lowest level in a decade earlier this year as booming production pumped up U.S. inventories. The supplies continued to build as demand fell during the mild winter and spring.
Natural gas prices have recovered somewhat as demand picked up during the hot summer. Many utilities also switched to cheaper natural gas from coal to generate electricity.
Brackett wrote that the fundamentals in the oil market are different. He said oil prices have been sustained despite the oil shale production boom. There are more customers and quality drilling locations are limited in shale formations.
Energy companies with the lowest cost structures will earn the greatest margins, he predicted. Among those he singled out were EOG Resources Inc., Apache Corp., Anadarko Petroleum Corp., Noble Energy Inc. and Talisman Energy Inc.
In midday trading, shares of EOG rose 33 cents to $109.90 per share, Anadarko was up 19 cents to $69.79, Noble gained 18 cents to $88.83 and Talisman fell 4 cents to $13.55. Apache fell 6 cents to $89 per share.