Deloitte forecast lower oil, flat natural gas prices

The financial services firm predicts West Texas Intermediate prices will be US$95 per barrel for 2014, dropping to US$90 the following year and US$85 by 2018.

It sees natural gas prices on the New York Mercantile Exchange at US$4.10 this year, rising to US$4.15 in 2015 and staying flat as far out to 2021 and 2022.

In a commentary, the report’s authors say increased U.S. oil production is likely behind the lower forecasted oil prices.

Andrew Botterill and Kyle Christie say price increases for natural gas will be small at best unless consumption increases or new export markets open up.

They say the lacklustre outlook means oil and gas companies must plan with caution.

14 Comments on "Deloitte forecast lower oil, flat natural gas prices"

rockman on Sat, 4th Jan 2014 5:13 pm 



I always find price projections interesting especially when they stand in such strong contrast to recent trends. So a rather flat NG price projection of $4.15 for the next 8 years. This compares to the last 7 year trend when prices moved from $9 to $6 to $13 to $2 to $6 to $4 to $5 to $3 to $4. And in just the last 3 years the price swung 50%.

So a rather volatile range in prices for the last 7 years and virtually zero volatility in the next 8 years. Everyone gets to make a guess…it risks nothing. Unless one has the balls to back up their prediction by buying NG futures.

And oil: “…increased U.S. oil production is likely behind the lower forecasted oil prices.” Interesting prediction given that the recent increase in US production is clearly related to higher oil prices. So their projection is just the opposite: lower prices will be followed by a continued increase in production. Might have some validity IMHO if the recent increase had come from conventional reservoirs with relatively slow decline rates compared to the very high decline rates of the shale trends. Again, it would be interesting to see if these projectors had the confidence to invest $millions in oil futures based upon their expectations.

robertinget on Sat, 4th Jan 2014 5:50 pm 



AS usual, ‘Rockman’ is bang on.

Whenever one sees forecasts of this nature, look to the source. If that
forecaster is a disinterested party and backs up all her claims with data, she still will be wrong more often than not.
Forecasting fuel prices out more than a day is impossible.THere are too many unpredictable variables besides outright manipulation.
The last few days are a case in point.
In middle of a major cold spell,
pages full of Middle East crises; Iran, Iraq, S.Sudan, Saudi Arabia, Israel,
crude oil, even heating oil and gas prices do a double back flip in the tuck position.

The truth is traders need to pay very high rents in NYC or London.

Arthur on Sat, 4th Jan 2014 5:50 pm 



The prices at the pump in the Netherlands are low, 30 euro cents/liter below the all time high. Just got a letter from my energy provider saying that prices will be lower in 2014.

Arthur on Sat, 4th Jan 2014 7:51 pm 



In the coming FOUR years Europe will close down a whopping 30% of it’s fossil power generation capacity, because of the rise of renewable sources. Don’t expect rising fossil fuel prices any time soon.

http://cleantechnica.com/2014/01/04/europes-fossil-fuel-exit-30-fossil-fuel-power-capacity-close-2017-ubs-analysts-project/

Kenz300 on Sat, 4th Jan 2014 8:18 pm 



The price of oil, coal and nuclear keeps rising and causing environmental damage………

The price of wind and solar keeps dropping every year……. once installed there are no monthly fuels bills for 25 years or more…………

shortonoil on Sat, 4th Jan 2014 8:31 pm 



Petroleum prices have closely followed a specific mathematical function for the last century. The present low price is equivalent to the staggering fall that took place after the dot com bust of 1998. Prices fell to $10.87/b from $17.27 in 1997. By 2000 they had moved back up to $26.72 (WTI, EIA).

The present price of $94.82 (01/03/14) is about $20.00/barrel below its long term mean. This is the result of shale production inflating the crude inventory with field condensate. As shale production will undoubtedly go into terminal decline over the next 24 months, expect crude prices to catch up shortly afterward.

rockman on Sat, 4th Jan 2014 8:47 pm 



“Just got a letter from my energy provider saying that prices will be lower in 2014.” As many US utilities anticipated just before prices went from $6 to $13. So before prices rose higher many utilities locked in prices with futures contracts. And then many lost hundred of $millions when prices dropped to $2.

But, to be fair, many energy companies were just as bad predicting prices. Devon signed contracts for 18 rigs to develop shale gas in east Texas in 2008. And then in less than a year cancelled 14 of those contracts paying $40 million in penalties for doing so.

So Arthur…did you utility offer to lock in those low predicted prices for you? Or did they not have enough confidence to back up their prediction with their wallet?

Arthur on Sat, 4th Jan 2014 9:07 pm 



rockman, energy prices are a small item on my overall budget. To be honest I don’t care, the letter with details is already in the garbage bin. I have a CV, that only heats my living room (the radiators in all other rooms, kitchen and bathroom are always switched off, except when outside temperatures are below minus 5 Celcius, which almost never happens), a telly for the eight o’clock news and a German (Tatort) or Swedish (Wallander) or British (Midsomer Murders) detective on Friday & Saturday night, a computer always switched on when I am at home (which is the case 6-8 months per year), a fridge, a single floor lamp, a tablet, a Christmas tree lighting, a rather modest energy consumption pattern. And later this year everything will be powered by a solar installation of 12 * 250 Watt panels + feed-in. And maybe next year the CV installation will be supported by a heat pump, with my large (for Dutch standards) middle of the city garden of 200 m2 functioning as the ‘cold side’.

J-Gav on Sat, 4th Jan 2014 9:30 pm 



All energy prices will (once again, and after some fluctuations which will baffle the clueless), be heading north in the next decade or so, permanently!
All we can do is get used to it and try to adapt.

robertinget on Sat, 4th Jan 2014 9:36 pm 



Oh, I forgot to mention, besides record cold in regions where fuel oil is still favored over gas and electric heat, consumption of all three are set for record draws following on five straight weeks negative storage numbers.
Despite crappy driving conditions across
the US, Americans consumed 20 million barrels of crude daily.

http://www.eia.gov/petroleum/supply/weekly/pdf/highlights.pdf

Yes, I’ve been reading these reports most Wednesday’s for 17 years. I can say
unequivocally, this one is about as ‘bullish’ as it gets. (because of New Years, this report was released Friday
resulting in a great deal of scrambling
by traders to cover shorts on both sides of the Atlantic resulting in a further
drop in Brent and WTI CL.

Want more? You should pardon the expression, Icing on that cake, here’s
the NG report;

Summary
Working gas in storage was 2,974 Bcf as of Friday, December 27, 2013, according to EIA estimates. This represents a net decline of 97 Bcf from the previous week. Stocks were 562 Bcf less than last year at this time and 289 Bcf below the 5-year average of 3,263 Bcf. In the East Region, stocks were 226 Bcf below the 5-year average following net withdrawals of 67 Bcf. Stocks in the Producing Region were 27 Bcf below the 5-year average of 1,088 Bcf after a net withdrawal of 13 Bcf. Stocks in the West Region were 36 Bcf below the 5-year average after a net drawdown of 17 Bcf. At 2,974 Bcf, total working gas is within the 5-year historical range.

Not as bullish for NG but any fool knows this coming Thursday will report
a draw few will forget. IOW’s, gas to
$5.00 at least for a few hours.

(NG was down 1% on Friday)

Arthur, I hate break it to ya but you’re going to need twice that number of PV’s.

Arthur on Sat, 4th Jan 2014 9:48 pm 



Arthur, I hate break it to ya but you’re going to need twice that number of PV’s.

12 * 250 = 3000 Watt.

Under Dutch circumstances, as a rule of thumb, 1000W peak translates to 850 kwh/year. In other words I can expect 2550 kwh/year. Currently in the winter, my household consumes a meager 5 kwh/day. Assuming that the summer is the same, that would be 365 * 5 = 1825 kwh. In other words I am going to run a surplus, obviously in combination with feed-in.

mike on Sat, 4th Jan 2014 9:54 pm 



“In the coming FOUR years Europe will close down a whopping 30% of it’s fossil power generation capacity, because of the rise of renewable sources.” When Arthur says “Europe”, his understanding of Europe does not includeSpai, Portugal, Italy, Croatia, Slovenis, Hungary, Poland, Czecki, Slovakia, Serbis, France, Belgium, Romania, Ireland, or Britain. Arthur’s concept of Europe is a little more restricted. Mediterranean Europe has obviously a considerable solar power potential, but in reality it is and will continue to be little developed. Wind power is especially available in Ireland, Britain, coastal France, Belgium and Netherlands,and of course Scandinavia. What renewables Arthur’s Netherlands (does he call it Plattdeutschland?) will be developing is not easy to know, given their rain swept cloudy climate, lack of Hydro power, and limited area for developing wind. Scandinavia is of course rich in Hydro both developed and potential and windpower. And then there is Germany – which is what Arthur actually means when he says “Europe”. Well, we shall see.

Arthur on Sat, 4th Jan 2014 10:35 pm 



You could of course actually read the article, I merely grabbed the headline. It is not about what I mean with Europe, but what the American author means with it. And actually Italy has a lot of solar, not just potential. Yours and mine countries are actually suckers when it comes to renewables. Blame the Seven Sisters.

rockman on Sun, 5th Jan 2014 6:10 am 



Arthur – Congrats…looks like you’re moving in a good direction. About the best you can say for the US is that with all our waste we have a lot more to gain thru conservation than the EU.