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Balanced oil, gas summer prices forecast
Gary Park For Petroleum News
Moderation and stability are the operative words that emerge from summer oil and natural gas price forecasts by Canada’s National Energy Board.
The federal regulator predicts crude oil will average US$75-$85 per barrel and natural gas will trade at US$4-$5 per million British thermal units over the period as energy consumption edges up in step with the global economy.
The outlook report points to North American gas production in line with last year’s levels, although larger than average storage injections will push inventories to 4.4 trillion cubic feet by the end of October.
On the oil side, spare capacity within the Organization of Petroleum Exporting Countries will ensure world markets are well supplied, easing price pressures, the NEB said.
The board estimated OPEC’s excess capacity is about 4 million to 5 million barrels per day, which ensures that world oil markets “are well supplied, mitigating the potential for upside price volatility.”
Last year, crude prices averaged US$63 per barrel and gas was US$3.64 per million Btu over the April 1-Sept. 30 period.
Continued drop in gas production NEB analyst Darcy Johnson told reporters that the downturn in Canadian gas drilling since 2008 points to a continuing drop off in production to 13.5 billion cubic feet per day by October, off 1.2 bcf per day from a year earlier.
“In the short term the only province expected to increase its production of natural gas is British Columbia, largely due to the development of the Montney and the Horn River shale gas plays,” he said.
The NEB said output from horizontal drilling for shale gas in the United States is expected to moderate declines in production from other areas and keep U.S. volumes on a par with last summer.
Johnson said gas demand within the industrial sector — which accounts for about one-third of North American consumption — holds the key to the summer demand, especially in the chemicals and steel businesses.
He said imports of liquefied natural gas should increase as a result of higher global supply and slightly higher North American prices, with supplies from new production trains around the world reaching North American markets.
Johnson forecast that LNG imports are expected to reach almost 2 bcf per day by October, still far short of North American import capacity of 17 bcf per day, while overall North American supply is forecast to remain around 70 bcf per day.
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