Energy Sector in decent shape
Posted: Mon Aug 30, 2010 8:00 pm
I know it is difficult to look past all the gloom and doom in the economy but let's take a look at the energy sector.
Last
Year____Today
$72.50 $74.00 < Crude oil price on NYMEX
$ 2.75 $ 3.84 < Natural gas price on NYMEX
Working gas in storage was 3,052 Bcf as of Friday, August 20, 2010, according to EIA estimates. This represents a net increase of 40 Bcf from the previous week. Stocks were 198 Bcf less than last year at this time and 177 Bcf above the 5-year average of 2,875 Bcf. So we are approaching winter with less gas in storage (demand going up or supply going down. Actually, a bit of both.)
1,183 2,042 < U.S. + Canada active onshore rig count
__ 51 ___69 < Offshore rigs in the Gulf of Mexico under contract
So:
1. Crude oil trading in a range that is quite profitable for most U.S. and Canadian oil development projects
2. The natural gas market has tightened and the price (although still low) is well above last year's price
3. Oilfield service and supply companies are doing OK with the rig count this high.
Could it get worse? Certainly, but right now the fundamentals for oil and gas are actually fairly good.
All the political bashing will continue for a couple more months. People hear it day after day and it is hard not to be depressed when the gang we have in Washington is clueless on what to do next. My hope is that after the November elections we enter a period of deadlock. All business needs is some certainty to stablize. Unemployment will remain high but we should see some improvement after the election period.
Remember the 10% investment tax credit? That could sure stimulate some growth prior to year end. OUr business need a break.
Dan
Last
Year____Today
$72.50 $74.00 < Crude oil price on NYMEX
$ 2.75 $ 3.84 < Natural gas price on NYMEX
Working gas in storage was 3,052 Bcf as of Friday, August 20, 2010, according to EIA estimates. This represents a net increase of 40 Bcf from the previous week. Stocks were 198 Bcf less than last year at this time and 177 Bcf above the 5-year average of 2,875 Bcf. So we are approaching winter with less gas in storage (demand going up or supply going down. Actually, a bit of both.)
1,183 2,042 < U.S. + Canada active onshore rig count
__ 51 ___69 < Offshore rigs in the Gulf of Mexico under contract
So:
1. Crude oil trading in a range that is quite profitable for most U.S. and Canadian oil development projects
2. The natural gas market has tightened and the price (although still low) is well above last year's price
3. Oilfield service and supply companies are doing OK with the rig count this high.
Could it get worse? Certainly, but right now the fundamentals for oil and gas are actually fairly good.
All the political bashing will continue for a couple more months. People hear it day after day and it is hard not to be depressed when the gang we have in Washington is clueless on what to do next. My hope is that after the November elections we enter a period of deadlock. All business needs is some certainty to stablize. Unemployment will remain high but we should see some improvement after the election period.
Remember the 10% investment tax credit? That could sure stimulate some growth prior to year end. OUr business need a break.
Dan