oil prices

The prescribed treatment for market- and virus-induced oil price collapse is to quickly slow production growth. Two US shale companies moved swiftly to cut the pace of drilling and completions, but it is too soon to know if that will have any impact.

Heavy production spiked in two Canadian wells heated by an electric cable, but it is hard to find customers there at a time when Canadian oil prices and customers remember cables in the past that died young.

The recent jump in oil price could create additional momentum for margins in the service sector. With shale euphoria wearing off, service company margins are still showing some resiliance. If the price hike persists into 4Q 2019, increased activity could improve pricing further.

Oil prices have fallen since early October in lockstep with the plunge in 2014. But this time oil companies appear better able to deal with a tough situation.

The oilfield services sector showed steady revenue growth in 2018 thanks, in part, to increased project sanctioning. With the oil price falling $20 in the past 2 months, however, the future may be murkier than expected.

Oil prices appear to have stabilized during the past year, and speakers at the annual Energy and the Economy Conference at the Dallas Federal Reserve Bank say they expect prices to remain level, at least for a little while.

Energy activity has shown solid expansion, but to increase drilling, companies need a higher average oil price compared to last year’s surveys, reflecting a steady increase since 2Q and 4Q in 2017. The ability to find workers and limited pipeline capacity could limit near-term growth.

A fairly stable set of conditions coalesce to make a strong reason to expect the oil price to range between USD 30/bbl to USD 60/bbl for the foreseeable future.

Merger and acquisition activity has been limited since prices started to fall in 2014. But there are signs that M&A activity may be building, and oil company management teams should think about which deal strategies they should pursue.

Continued suppression of global oil prices has questioned the viability of several large and ultradeepwater projects. Article covers Douglas-Westwood’s deepwater expenditure forecast for the 2016–2020 period, and the effect of reduced rig demand on deepwater Capex growth.