Investors are shifting away from exchange-traded crude oil contracts into other listed energy products, especially natural gas, in anticipation of lower U.S. gas production and higher prices, Barclays Plc said. Energy investors expect a “sharp rise” in U.S. gas prices “once the steep fall in rig counts triggers large production declines,” Barclays said yesterday in a report. About $500 million flowed last month into the U.S. Natural Gas Fund, the sister product to the U.S. Oil Fund managed by Alameda-based United States Commodity Fund, Barclays said. The gas fund has $1.1 billion in assets under management, the second-highest on record, Barclays said. It holds a total of 97,000 futures and swap contracts, according to its Web site. The U.S. Oil Fund, the world’s largest exchange-traded product, has shed almost 40 percent of its contracts since early February. It now holds 48,852 contracts, compared with about 79,000 on Feb. 4, according to data on its Web site. Interest in the gas fund may not be sustained, Barclays said, because the cost of rolling over contracts before expiry is high. To maintain its position, the fund sells, or rolls over, its front-month contracts before they expire and buys second-month futures. At about 5 percent of total open interest in the U.S. natural gas market, the fund isn’t likely to affect prices beyond the front month. “In our view, with any recovery in natural gas prices likely to be led by the back end of the curve, we would position for exposure in the forward 2010 contracts instead,” Barclays’s analysts said in the report.

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