Energy Prospectus

Shale Restraint Could Lift Oil To $80.
Brent recently hit $70 per barrel and WTI surpassed $64.50, and oil executives from the Middle East to Texas no doubt popped some champagne. The big question is whether or not U.S. shale will spoil the party by ramping up production to extraordinary heights, setting off another downturn. The EIA made headlines a few days ago when it predicted that U.S. oil production would surge this year and next, topping 11 million barrels per day by the end of 2019. But shale executives repeatedly promised their shareholders that they would be prudent this time around, eschewing a drill-no-matter-what mentality that so often led to higher levels of debt…and ultimately to lower oil prices. Shale executives repeatedly insisted in 2017 that they would not return to an aggressive drilling stance even if oil prices surged. We will soon find out if oil in the mid-$60s can entice shale drillers to shed their caution and jump back into action in a dramatic way. For its part, Goldman Sachs seems to believe the promises from the shale industry.

We will soon find out if oil in the mid-$60s can entice shale drillers to shed their caution and jump back into action in a dramatic way. For its part, Goldman Sachs seems to believe the promises from the shale industry.

The investment bank said that at an industry conference in Miami on January 10-11, shale executives reiterated their strategies of caution. “Shale producers are largely not looking to use $60+ oil in their budgets and spoke more proactively about debt paydown, corporate returns and returning cash to shareholders.”
Related: Cold Snap Leads To Biggest U.S. Natural Gas Draw Ever

This newfound restraint would contribute to still more gains in oil prices, the investment bank said. “With Discipline along with Demand and Disruptions (the 3 Ds) key drivers of Energy equity sentiment, we see potential for a grind higher as long as datapoints are favorable,” Goldman wrote. Global oil demand is set to grow at a robust rate this year, and a series of disruptions could keep supply offline in places like Venezuela, Iraq, Iran, Libya and Nigeria.

Full Article: https://oilprice.com/Energy/Crude-Oil/S ... To-80.html


Joseph Dancy, Director of the Energy Department at OU says WTI will average $67/bbl in 2018: http://www.lsgifund.com/OU/2018Outlook.pdf

Robert Rapier: https://oilprice.com/Energy/Energy-Gene ... -2018.html

Robert is an EPG member and we talk from time-to-time. Each year he makes five predictions and most of them come true. Look at his natural gas price forecast.

Analysts differ on next moves with oil at $70.
Few expected Brent to hit $70 per barrel so soon, and what happens next is a matter of opinion. With outages in key oil producing countries, strong demand expected this year, and ongoing declines in inventories, some analysts see more room on the upside. “Pretty much all of the fundamental boxes are supportive of the current rally and a bit more,” said Paul Horsnell, head of commodities research at Standard Chartered Plc in London. But others believe the rally has gone too far. “Seventy dollars is too much,” said Eugen Weinberg, head of commodities research at Commerzbank AG, according to Bloomberg. “It’s not completely unexpected, given the price momentum. But there will be a reaction in U.S. shale, and OPEC’s strategy will backfire massively.”
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MY TAKE: WTI will top $70/bbl within six months as demand for refined products surges in Q2.