Displaying items by tag: oil

Sunday, 12 March 2023 17:03

Offshore Oil Rebound Underway

While offshore oil drilling has been growing slowly in recent years, research firm Rystad Energy expects a surge in new spending over the next two years. Energy companies had previously been hesitant to commit to expensive new projects that can take years to pay off. But with oil and gas demand rising after the pandemic, some companies are now looking for projects that can offer reliable production in the longer term. According to Rystad Energy, the offshore oil and gas industry has $214 billion of new project investments lined up in the next two years, the highest two-year total in a decade. In fact, it will mark the first time since 2012-2013 that companies have spent this much to develop offshore projects. According to Rystad, “Offshore activity is expected to account for 68% of all sanctioned conventional hydrocarbons in 2023 and 2024, up from 40% between 2015-2018.” Middle Eastern producers will account for most of the growth, however, there are projects off several continents. For example, U.K. offshore spending is expected to rise 30% this year to $7 billion, while spending on Norwegian projects could increase 22% to $21 billion, according to Rystad. Plus, North America, Brazil, and Guyana are all seeing growth as well.


Finsum:According to research firm Rystad Energy, a surge in new spending for offshore oil drilling is expected over the next two years as companies look for projects that can offer reliable production in the longer term with oil and gas demand rising.

Published in Eq: Energy

While oil prices fluctuate constantly, there is a broad consensus that prices will rise throughout 2023. For instance, Forbes' Bill Sarubbi noted that the technical data of oil trading suggests prices are going to go higher. In a recent article, Sarubbi said that historical data shows oil prices tend to rise between March and May most of the time, therefore it makes sense to expect prices to rise this year as well. Data analytics firm Refinitiv singled out two factors that will drive prices on the supply and demand sides, Russia and China. Refinitiv expects Brent crude to rise above $100 per barrel by the end of the year and average $90 for the full year. The company said at a recent industry event that oil demand this year will surge by 2 million barrels daily and that China will account for half that. In addition, Russia's supply will tighten this month and maybe remain tight, which adds upward pressure to oil prices. Plus, Goldman Sachs senior energy economist Daan Struyven recently reiterated the bank's forecast for higher oil prices due to the lag between an oil market shock and the effect of the shock manifesting in futures prices.


Finsum:There is a broad consensus that oil prices will rise through the year due to technical data of oil trading suggesting prices are going to go higher, demand from China, tightened Russian supply, and the lag between an oil market shock and the effect of the shock manifesting in futures prices.

Published in Eq: Energy

With ESG investors pressuring companies to transition to sustainable businesses, BP’s chief executive Bernard Looney is warning that the energy transition needs to happen in an orderly fashion or else oil and gas prices will spike if supply is cut too quickly without a drop in demand. Looney stated the following at the recent International Energy Week event in London, "Reducing supply without also reducing demand inevitably leads to price spikes – price spikes, leads to economic volatility." He added that we need, “Affordable energy flowing where and when it's needed... Investing in energy security and the energy transition. This is Looney’s second warning for the need for an "orderly transition.” In early February, he stressed "an orderly" transition when he announced that BP would be producing more oil and gas for longer, and now aims for a fall of 20% to 30% in emissions from the carbon in its oil and gas production in 2030 compared to a 2019 baseline, lower than the previous aim of 35-40%. At the London event, he also noted that “People today want an energy system that works. That provides secure, affordable, and low-carbon energy - what the Energy Institute calls the triple energy crisis."


Finsum:At a recent energy event in London, BP CEO Bernard Looney warned for the second time that the energy transition needs to happen in an orderly fashion or else oil and gas prices will spike.

Published in Eq: Energy
Friday, 03 February 2023 06:25

Analysts: Big Oil Has Passed its Peak

After two years of surging growth, this earnings season could mark the beginning of energy company profits coming back down to earth. That is according to Wall Street analysts who believe Big Oil has passed its peak. However, the ride down is expected to be slow, with companies still expected to bring in large profits for some time. Last year was a boon to oil and gas companies. The energy sector ended the year up 64.56% as sky-high oil and gas prices were one of the largest contributors to inflation. The sector thrived with a hawkish Fed, high inflation, economic uncertainty, and Russia’s invasion of Ukraine. But analysts don’t believe this will continue for much longer. HSBC Global Research analysts wrote in a note that “Although 2023 should remain a solid year for the integrated oils, there is less headroom than we envisaged just a couple of months ago given the correction in oil prices and halving in European gas prices.” In addition, Bank of America estimates that earnings for the fourth quarter from oil and gas producers will be down 11% from third-quarter levels. Doug Leggate, a Bank of America research analyst, wrote in a recent note that “In our view, upcoming earnings for the US oils will be one of the most consequential in several years. It is now clear that the best quarter for many US oils has passed.”


Finsum:While oil and gas companies thrived in last year’s conditions, Wall Street analysts think profits will eventually come back down to earth due to a recent correction in oil prices and the halving of European gas prices.

Published in Eq: Energy
Wednesday, 25 January 2023 11:55

Surveys: Higher Oil Prices Expected in 2023

Oil stocks were some of the best investments last year as the energy sector gained 64.56%. Oil stocks could once again have another good year if oil prices rise as investors and firms expect them to. According to the latest Bloomberg MLIV Pulse survey, both professional and retail investors see higher oil prices over the next six months, with retail traders, in particular, even more bullish than professional investors. Investors are not alone in predicting a rise in oil prices. The Federal Reserve Bank of Dallas recently surveyed 152 energy firms in Texas, Louisiana, and New Mexico. Based on the results of the survey, the industry is expecting marginally higher oil prices in 2023. When asked what they believe the price of WTI would be at the end of the year, the average answer was $84 per barrel. The spot price for WTI was $73.67 at the time of the survey. The are several reasons for companies and investors to be bullish on oil this year. Oil prices could rise on optimism that China reopens its economy after implementing severe COVID restrictions. In addition, both OPEC and the International Energy Agency (IEA) see the global oil market tightening in the second half of the year. With the supply of global oil below the demand, prices should rise.


Finsum:Both investors and energy firms expect the price of oil to rise based on China's reopening and OPEC and IEA’s view that the global oil market is tightening.

Published in Eq: Energy
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