Despite the recent period of uncertainty in the oil and gas market, research contained within Stratas Advisors’Short-Term Price Outlook predicts that oil prices will gradually recover through the end of 2017. After foreseeing both the Q1 2016 price bottom and the net impact of the recent OPEC meeting in Doha, Stratas Analysts’s predictions are likely to inspire confidence in decision makers. The positive predictions are expected to influence short-term planning on capital allocation like rig deployments, investment strategy and managing cash flow.
The Short-Term Price Outlook presents quarterly price forecasts for the next 24-months that cover pricing, key drivers and market fundamentals for the entire energy value chain. The web-based interface combines sophisticated modelling techniques with decades of market experience. The most recent update gives insights on global crude and regional petroleum products, global LNG, US natural gas and natural gas liquids (NGLs), as well as global biofuels.
Some key findings include:
Stratas Advisors accurately predicted the price bottom for Q1 2016. Their forecast was less than US$0.50/bbl off from actuals.
Global oil demand is expected to rise 900 million bpd in 2016, 800 million bpd lower than growth seen in 2015. Lagging demand combined with persistent supply will result in Brent crude prices at US$50/bbl by the end of 2017.
It is held that the April OPEC meeting in Doha is unlikely to yield significant progress with regards to the supply glut, in the wake of sanctions on Iran and Iraq having been lifted and Russia and Saudi Arabia currently operating at full capacity.
Asian light/heavy product differentials are to increase by US$4/bbl year-on-year due to lagging demand for residual fuel oil versus continued growth in gasoline and diesel. US NGL markets are expected to remain weak in 2016, with Y-grade prices averaging US$1 lower per barrel than prices seen in 2015.
Henry Hub prices will also struggle to clear US$3 per mmbtu throughout the forecast period due to continued oversupply in the US.
Asia’s LNG prices will remain between US$8/mcf and US$10/mcf due to increased availability of global imports from the US and Australia.
US ethylene prices will drop by 6.1% by 2017 because of lagging global demand combined with continued access to low-cost feedstock.
Gasoline crack spreads in the US are likely to decrease by roughly US$4/bbl by the end of 2016.