Analysts Predict Natural Gas Prices to Rebound in 2021

Is relief on the horizon for Marcellus/Utica drillers in the form of higher prices for natural gas? According to several analysts, due to several factors coming later this year and next year (a rebound in the economy, lower natgas production), we will see “significantly higher prices next year” for natgas. How much higher? “We expect an average Henry Hub price of $3.50[/MMBtu] for next year and anticipate gas reaching the $4 threshold in [the fourth quarter of 2021].” Between now and then it’s a game of Survivor…until higher prices get here.
Continue reading

Analysts Say NatGas, LNG Demand for 2020 “Unpredictable”

Unpredictable

Commenting on their latest short-term gas and LNG outlook report, energy consulting firm Wood Mackenzie says worldwide gas supplies have been impacted by the triple whammy of coronavirus, oil price crash and LNG oversupply. While WoodMac expects LNG demand to grow by a modest 6% this year, “the numbers will need constant revision as economies around the world feel the force of the growing pandemic.” WoodMac also says, “the narrative for the rest of 2020 could not be more unpredictable.” Meanwhile, according to NGI, global natgas prices are currently in a “freefall” hitting new lows in Asia and Europe.
Continue reading

Contrarian Goldman Sachs: Shale a Winner in Oil Price War

Is this an April Fool’s joke? Bloomberg is reporting comments from Damien Courvalin, Head of Energy Research & Senior Commodity Strategist at Goldman Sachs, saying U.S. shale oil drillers will emerge from the current oil price crash as “a winner.” This is the opposite of every other analyst we’ve read. What does Courvalin see that’s different from everyone else?
Continue reading

Trump to Putin: Let’s Talk About Low Oil Prices & What To Do

President Trump had a phone conversation with Russia’s dictator Vladimir Putin on Monday. The topic? The Saudi-Russian oil price war, which Trump calls “crazy.” The result of the call was to tee up each country’s top energy officials, getting them to discuss ways to prop up the price of oil. Energy Secretary Dan Brouillette will talk with Russian Energy Minister Alexander Novak about “ways the world’s largest producers can address volatility in the global oil markets during this unprecedented period of turmoil.”
Continue reading

Why U.S. Gov’t is Not (Yet) Addressing Oil Price Crash Issue

Why is the Trump Administration not taking decisive action to address the crash in the oil price brought on by the Saudis and Russians? Agreeing to “talk about it” with the Russians, as we outline in another post today, is not action. Neither is buying up some extra barrels of oil for the strategic petroleum reserve. We think David Blackmon, a longtime oil industry worker and observer hits the nail on the head in a new column just published by Forbes. The reason the government isn’t addressing the oil price crash issue right now is…
Continue reading

Experts Predict NatGas Demand/Prices Remain Low into Next Winter

Tenaska is #3 on the list of North American gas marketers–buying and selling more natural gas throughout the country than every other company save two (BP and Macquarie, see Who Sold the Most NatGas in the U.S. in 4th Quarter 2019?). So when the president of Tenaska, David Whitt, says demand for natgas is likely to drop this summer and demand stay low all the way into next winter, you can’t ignore it. He’s probably right. His business depends on him being right.
Continue reading

How Oil Crash/Virus has Altered Future of NatGas, NGLs, Midstream

Everyone, and we mean everyone, is still reeling from the double shock of the COVID-19 coronavirus and its effect on the world economy, and the Saudis and Russians pumping more oil, driving oil prices into the ground. Frankly, the COVID-19 virus is the bigger deal. It will have long-lasting effects for years to come on the U.S. economy, including a big effect on the oil and gas industry. The question is, what kind of effect? Is there any way to predict what may happen in the coming couple of years and longer? No one can really predict, but if anyone could, it would be the bright minds at RBN Energy. They’ve attempted the near-impossible: Try to predict how things will change following the COVID-19 lockdown (around March 6). Try to divine how the oil and gas (and NGL and midstream) worlds will change in the coming months and years. Their assessment is sobering.
Continue reading

Cheapest Way For Trump To Save U.S. Oil – Variable Tariff

The American oil industry is in crisis. This is undeniable. Some folks will point out this isn’t the first serious downturn for the oil industry, and it won’t be the last. True enough. But this one IS different. Not in recent memory (at least a generation) has there been both a shock in the supply picture (Saudis and Russians fully opening up the taps) and a shock in the demand picture (very little travel due to the pandemic). We at MDN have taken a view in favor of a tariff on imported foreign oil to encourage better behavior. Now comes a tweak to the tariff strategy.
Continue reading

Marcellus Shale Coalition Comes Out Against Oil Tariffs

We’ve brought you several stories about the Saudi-Russian oil price war underway in which both Saudi Arabia and the Russians are pumping oil like crazy and lowering the price they charge for their oil–all in a bid to bankrupt American shale oil companies. A number of ideas have been floated to “encourage” the Saudis to scale back on production, which would raise prices again (the Russians are a lost cause and not worth the effort). We’ve talked about an embargo on foreign oil coming into the country (see U.S. Sen. Kevin Cramer Asks Trump to Embargo Saudi/Russian Oil), and our preferred response, a tariff on foreign oil (see It’s Time for a $40/Barrel Tariff on Saudi Oil Coming into U.S.). Not everyone thinks an embargo or tariff is a good idea, including the Marcellus Shale Coalition (MSC).
Continue reading

LNG Cargoes All Dressed Up with Nowhere to Go

It seems no market has been left untouched by the COVID-19 coronavirus. Not even the LNG (liquefied natural gas) market. Force majeures–cancelations of LNG contracts due to circumstances “beyond our control”–are now an almost daily occurrence. Big tankers full of LNG often leave a port without a final destination, receiving instructions along the way on where the ship will unload the LNG. A cascading number of force majeures has some of those ships sailing around, “all dressed up but nowhere to go.”
Continue reading

Investors Return to ‘Safety’ by Investing in M-U Gas Companies

What a change just a few weeks (and a pandemic and oil price crash) can bring! One month ago MDN brought you the sobering news that the stock prices for most Marcellus/Utica companies had sunk to new lows (see Marcellus/Utica Drillers’ Stock Prices Near/At Historic Lows). The prospects for M-U companies, as far as investors were concerned, were bleak. Oil drillers in other plays like the Permian and Bakken were pumping like crazy producing a lot of associated gas along with oil from those wells, flooding the market with an excess of gas. One month later and the picture has completely changed. M-U company stocks (some of them anyway) are rising again. EQT’s share price is up 50% in the last 30 days!
Continue reading

U.S. Explores Luring Saudis Away from OPEC into New Oil Alliance

OPEC, the Organization of the Petroleum Exporting Countries, is a pact of colluding oil-producing companies that act to artificially lower or raise the price of oil around the world based on how much the colluders are willing to pump. OPEC is the antithesis of free trade. But it does serve a purpose that (unfortunately) all oil drillers, including U.S. drillers, depend on–keeping prices high enough to be profitable. OPEC added Russia in a loose confederation for the past three years or so, something referred to as OPEC+. But then Russia recently told Saudi Arabia, the main OPEC player, to kiss off and left the OPEC+ fold, preferring to pump as much oil as they can. Saudi Arabia responded by increasing its production too, to drive prices into the basement, causing Russia (and U.S. shale drillers) pain.
Continue reading

Barclays Warns Oil Price Could Sink to $10/Barrel

A week ago we brought you the story that predicted the price of oil would go from the $30/barrel range down to the $20/barrel range–something almost unthinkable. And then it happened within a few days! Now we’re reading of warnings from Barclays, one of the biggest banks in the world, that the price of oil may go as low as (GASP) $10/barrel. At that price, there’s maybe one producer in the world that can still make at least some money–Saudi Arabia. Everyone else would be upside down and heading for bankruptcy court.
Continue reading

It’s Time for a $40/Barrel Tariff on Saudi Oil Coming into U.S.

Last Friday MDN laid out three potential options for how the U.S. government can deal with the Saudis and Russians flooding world markets with oil, driving the price into the basement in a bid to bankrupt American shale oil drillers, a practice called dumping (see U.S. Sen. Kevin Cramer Asks Trump to Embargo Saudi/Russian Oil). Option #1 was 13 U.S. Senators who politely asked the Saudis to knock it off. So far that hasn’t worked. Option #2 would be to impose a tariff on all imported oil. And option #3 would be to slap an embargo on imported oil. The American Petroleum Institute doesn’t want either a tariff or embargo. Some of the rank and file (oil drillers themselves) disagree with their lobbying group…
Continue reading

Is it Time for Fed & State Gov’t Intervention in the O&G Market?

Should the U.S. government step in to help the American oil and gas industry, given the current double crisis of both lower demand (COVID-19) and oversupply (the Saudi-Russia oil price war)? We’ve written about rumblings that since the Saudis and Russians are dumping oil (selling it far below the price to make it) on the world market, in an attempt to bankrupt American shale drillers, that the government should consider either imposing tariffs on imported oil, or possibly embargo imported oil. Free traders are aghast at such a notion. Fair traders (like yours truly) are less aghast, although as a general rule we don’t favor government intervention in the marketplace. Below are two differing views on whether or not Uncle Sam should do something to help O&G. Interestingly, the American Petroleum Institute says “no way” to government intervention.
Continue reading

Best Guess on How COVID-19, Oil Price War Will Impact M-U in 2020

The world as we knew it radically and fundamentally changed over the past two weeks. That’s a fact. The double whammy of the COVID-19 coronavirus shutting down world commerce (causing a big reduction in the use of oil and gas), and the Saudis and Russians engaging in an oil price war, flooding the world market with oil at a time when oil demand has gone down, is going to have an impact on the oil AND natural gas markets in the U.S. (and around the world) for months, likely years to come. How much of an impact is yet to be seen. We think the impact will be big. The experts at RBN Energy have taken a stab at predicting how these events will affect the entire U.S. oil and gas industry in 2020. As part of their coverage, RBN looks at impacts on “gas-focused” drillers, primarily in the Marcellus/Utica.
Continue reading