2016 Price / Supply Forecasts

Have been "reading up" on supply/demand/price performance for the coming year.  And and wondering how it will affect the value/prices of leasing and/or selling rights in the WV, Ohio, Pennsylvania Marcellus - Utica play.

One of the most believable articles I've discovered to date is at this link from etf.com:

http://www.etf.com/sections/features-and-news/2016-oil-whats-store

Where do you see oil prices going in 2016? 
Phil Flynn: We’ll see prices rebound because you’re going to see a massive cut in capital spending that’s already started to take its toll on supplies. One of the worst things that happened is that little double dip that we had in oil prices. Prices recovered in July and they brought back all these oil rigs and everybody thought the worst was over, but then prices crashed again because of China and Europe and Iran. Now everybody’s going to be afraid to bring production back on, which means they’re probably not going to act quickly enough when prices come back up.

Low prices will stimulate demand at a time when production is cut back. I think we’ll average $57 next year, but see a spike as high as $80.

Michael Cohen: We don’t think the current price levels are sustainable for medium-term growth of supply in order to meet the demand that’s been spurred on by these lower prices. Therefore, we expect we’ll see an adjustment back up into the $60 range in the second half of next year, and that that price level is going to be required to have enough supply to meet demand.

Fadel Gheit: We expect oil price volatility to continue in a narrow range below $50.

What’s your outlook for supply? Is the recent drop in U.S. production something that’ll continue? 
Flynn: It will drop by 1 million barrels per day. I think most people are behind the curve on those estimates. We’re already seeing evidence of the decline in Cushing, Oklahoma, where supplies are falling faster than anticipated.

Cohen: Over the next two to three months, we’re likely to see supply continue to decline. However, once the market realizes it needs U.S. shale output to continue to grow at a decent pace of 100,000 or 200,000 barrels a day per year, there will be a price impact later on in 2016.

Once that happens, you could get U.S. crude output back up to 9.6 million or 9.7 million barrels a day. We don’t really see a scenario in which U.S. production declines steeply, because there will be a market impact from that. Most of the U.S. producers that are sitting on a backlog of wells that they want to complete and bring on will do so at higher prices. By doing that, they’ll support overall output and mitigate the decline from existing fields, and there won’t be a steep trajectory down.

Gheit: We expect flat to small declines in supply as capital-expenditure cuts will be largely offset by efficiency gains and better allocation of capital. Production from new major project startups will offset shale production declines.



What are your insights?

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Replies to This Discussion

Permalink Reply by Jon on November 13, 2015 at 10:40pm

It sounds like they're all over the place. You never know what geopolitical issues will happen in the mean time.

Permalink Reply by bo boboski on November 14, 2015 at 4:45am

From what I've seen/heard /read over the years ,One thing that you know about the Oil&gas biz is,YOU NEVER KNOW.

Permalink Reply by Gunner Ostergard on November 14, 2015 at 7:02pm

I believe the article was written by someone who has an interest in persuading readers to either buy or sell according to the what benefits the writer the most.  That plus the fact that www.etf.com is in the business of selling adds on their website,  so what ever people want to read is what they will print. 

Permalink Reply by Janice L. Hancharick on November 15, 2015 at 12:30pm

No one has the magic crystal ball to project what will happen in the world of O&G next week, let alone next year.  Trends are noted that may reverse tomorrow. Volatility  is the name of the game ... esp. since the terrorist attacks in France.

Our resources will always be valuable, but putting a # on them that's written in cement ... impossible.

Permalink Reply by Mike Fulper on November 15, 2015 at 5:31pm

Trump has the answer..

bomb the oil fields in the ME....

will solve a lot of problems..

and our oil will probably go to $200 abbl....  :)

that will take the $ away from all of the terrorists ....and those that don't need it...

I just don't think the Saudis.. .need a SKI SLOPE INDOORS. in the middle of the Desert...

Our $ should be spent here in the USA...

Permalink Reply by Joseph-Ohio on November 15, 2015 at 6:28pm

Isn't Mr. Trump being rather extreme Mr. Fulper ?

The idea is way too 'Saddam Hussein' for me to support.

Maybe just lockdown Dubai and take away the keys to their indoor ski slope instead (to start the NWO ball rolling in the right direction again) ?

Maybe then SA will throttle back on their oil production ?

Then our diplomatic envoys could go to the Kingdom and / or the Emirates, hold hands with the Royals and have another royal happy dance (like GWB had back in the day - remember ?) ? ?

Permalink Reply by Jon on November 15, 2015 at 7:55pm
Permalink Reply by Mike Fulper on November 16, 2015 at 9:43am

I kinda think like Patton and McArthur   ... bomb em back to the stone age...

Only a huge dose of Discipline.. will straighten these people out....

Bombing the oil fields... is about the only answer.....

Having touchy feelly meetings have gotten the whole ME into shambles..

and is destroying your way of life....

NO OIL.... We win.. they lose.....

Most of the people in the ME still use Donkeys Camels and Goats... and live in

Mud brick homes.....

Sorry... im just like Trump.... get it over with......and soon...

I would rather people in OHIO were Millionaries then the Saudi's....

Our diplomatic envoys are Communist sympathizers .. ie.. Kerry....Hillary...etc..

Permalink Reply by Joseph-Ohio on November 16, 2015 at 1:22pm
I also want people in Ohio to prosper INCLUDING ME AND MINE (and including you and yours Mr. Fulper).

Yeah, I've been sayin' that for a long, long, long time and also that our Leadership and diplomats seem to always put all of us here at home on the back burner (or in the refrigerator-freezer) and work to help any other 3rd world country prosper instead. Yeah I'm sick of that too - have been for a long, long, long time.

But personally, I can't talk myself into going to war to smoke fuel.

How about a Middle Eastern SA / Iran / Iraq / Syria / OPEC / et al Fuel Embargo / Blockade instead ? Should they show up to resist / want to heat things up - we take care of business.

It might very well lead to a conflageration anyway however even though a conflagration isn't what we're looking for.

However, seems to me, things could be a lot better that's for sure.
Permalink Reply by Joseph-Ohio on November 16, 2015 at 2:18pm
You know, trying to figure out exactly what we want in all of this and I'm coming up short.

I THINK what we want is a Market Share that keeps our economy growing and prosperous.

Seems to me OPEC / SA / ME States / Countries also want that BUT they want us out of the picture.

They only worry about what makes sense (money / wealth wise) to themselves / their communistic / socialistic regime country / and don't really give a hoot about supply and demand (unless they're doing all the supplying) / a Free Market / a NWO (unless they're at it's helm) and so on.

I think we ought to take a lesson from them and only concern ourselves with what makes sense (money / wealth wise) to us and our hemisphere / zone of influence / allied business partners.

If we and our allies don't buy their fuel and don't concern ourselves with their hemisphere / zone of influence / allied business partners I think we would be better off. Incidentally, refusing our trusted and important ally to the North (Canada) regarding the Keystone XL partner is out of step with that philosophy and not smart at all. That one happened on this administration's watch. Also if our allies in Europe and the ME (thinking here that the only allied country we can count on in the ME is Israel), they ought to lock arms with us on this otherwise face the fate of being absorbed by some hard core, communist / socialist / despotic regime.

Worrisome is that I write these opinions while hearing socialism knocking loudly on our door right here at home.

JMHOs
Permalink Reply by Mike Fulper on November 16, 2015 at 6:07pm

Actually.. here is the answer to whats wrong.. .simple

Before 1947... and the signing of the ILLEGAL UN TREATY....

The United States won EVERY conflict we got into......ALL OF EM...

AFTER 1947.... we have LOST EVERY CONFLICT...

Korea.. just an excuse to have the UN control our Military...

VietNam... 17 Years of bombing for nothing.....

Iraq.. Afganistan..and every other deal we got into.. FAILURE...

Do you suppose the Illegal UN TREATY. .which controls Congress

has anything to do with it..  ??

GOOGLE... Mikhail  Gorbachev... "Green cross".....see how it was formed.

Reagan and Congress with Pilosi.. even gave this POS the

Presidio to live in.. FREE... you paid for it....  :(

and you will see what I mean... this is where  "go green" comes from.

Communist UN Plan.. to control.. OIL COAL  WATER.. AIR.... etc

simple enough to figure out whats wrong...

Diplomacy  does nothing....

Patton had the answer.. bomb the Russians back to Moscow....

and he came up dead..

After he said the US will rule the UNITED NATIONS....

McArthur said.. Bomb the Chinese back across the Yaluu river....

and he was "fired"

Trump is walking on THIN ICE......  :(

Permalink Reply by Joseph-Ohio on November 16, 2015 at 6:59pm
I read your words and don't know what to say except I agree with your analysis that every conflict we were ever involved in from (and including) Korea and then forward seems to me to have gotten us NOWHERE on the grand scale of there being lasting peace on earth / world peace (or even having gained anything other than surviving). Maybe that's all there is to be gained however, and we should perhaps count our blessings.

Maybe it's a case of being on a planet saturated with diversity - which I've read / seen / heard scientists / science say to be the probable cause of mankind's evolution / height of intelligence above all other earthly lifeforms.

Maybe it's all we can do to get close to that world peace goal.

These days however it doesn't even seem to be a goal if you ask me.

I think however that even if we 'won' all of those wars and any future ones there would be another to deal with - ad infinitum - FOREVER.

Just a very unfortunate (it seems to me fact) that war, is like SOP for the human race in general / another day in the life living on planet earth.

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