U.S. natural gas, which has fallen for eight of the past nine months, remains vulnerable to further declines should prices for a competing utility fuel, coal, tumble as well, Goldman Sachs Group Inc. said.

“Gas is priced competitively to coal and that’s generating demand as utilities burn gas in lieu of coal,” Jeffrey Currie, head of commodities research at the bank in London, said in an interview yesterday. “A risk to this view is that coal prices drop lower and then gas will have to decline again to create that same substitution. It’s too early to say that gas is at the bottom.”

Increased domestic production and a growing inventory surplus have helped push gas 15 percent lower this year, making it the worst-performing commodity on the Standard & Poor’s GSCI index of 24 raw materials. The fuel was the worst performer in the index in 2010 and the second worst last year, after cotton.

Natural gas for April delivery at the Henry Hub in Louisiana fell 3.2 percent to $2.52 per million British thermal units at 1:16 p.m. on the New York Mercantile Exchange. Gas fell to $2.231 on Jan. 23, the lowest since February 2002.

U.S. power utilities are reselling coal on the open market as demand is being displaced by gas, Lucas Pipes, an analyst at Brean Murray, Carret & Co. said on Feb. 27 in an interview with Pimm Fox on Bloomberg Television’s “Taking Stock.”

Central Appalachian coal for April, the U.S. benchmark contract, closed at $62.28 a ton on the Nymex yesterday. April futures rose for seven out of the past nine days after tumbling 13 percent in January.

Gas prices may recover next year, according to Goldman.

“Further out into 2013, we see higher prices, but this summer, we still see downside relative to the market,” Currie said.