Where does the oil price go from here?

[dan_s]

HFI Research: "I think we get another pullback to $67.50 area (WTI) and the market will want to see that hold. If it holds, then we will attempt the $71 to $73 region again. If that breaks, then we test $75 to $77. If that doesn't break, then we will revisit $67.50 again. At some point, the market will have to decide which way oil breaks. Refining margins should give us good clues going forward on this."

The price you see in the news is the front month NYMEX futures contract for WTI which is now NOV24.

During Q3, WTI has average close to $75 since it was above $80 for the first 20 days of the quarter. It dipped to $72 on August 5 then quickly moved back to $79 by August 12. During September WTI has average around $73.

My Q3 forecasts are based on WTI averaging $75 and HH natural gas averaging $2.15. I do adjust for each companies hedges and regional differentials, which for the Permian Basin very bad for natural gas due to lack of sufficient pipeline takeaway capacity.

My Q4 forecasts are based on WTI averaging $70 and HH natural gas averaging $2.75. < All of our Sweet 16 companies produce a lot of natural gas and NGLs, so for most of them the higher gas prices should offset most of revenue dip for the lower oil price. You can see how much gas each company produces on the 2nd tab of the Sweet 16 summary spreadsheet.

Thanks to the Matterhorn Express pipeline there is hope for better natural gas prices in the Permian Basin. If you want to add more exposure to natural gas stick with EQT, CTRA, CRGY, AR, RRC and EOG.

HH NGas futures contracts at the time of this post.
OCT24 $2.66
NOV24 $2.84
DEC24 $3.24

[KGardiner]

Dan, do you see CRK permanently out of the running for the Sweet 16?

Kevin