Global energy data analytics company, Enverus is out with its latest FundamentalEdge report showing crude oil prices are increasing along with natural gas production in 2021.
Entitled “A Delicate Balance,” the Envirus report focuses on the win streak of oil and gas and includes the firm’s five-year market outlook and current view of the oil, natural gas and NGL markets.
“Crude oil prices have had a good run over the past several months and the backwardated structure in futures markets is encouraging continued inventory destocking,” said Jesse Mercer, senior director of Crude Market Analytics at Enverus.
He said the key factor behind the tightening of physical markets has been production cuts by OPEC+ members. However Mercer also suggested the OPEC+ cohesiveness might be tested if the US and Iran reach a deal about reaffirming the nuclear deal which the US withdrew from in 2018 under the Trump administration.
“If this happens, we could see up to 1.5 MMBbl/d of Iranian crude re-enter the market starting as early as this summer,” said Mercer.
He suggested LNG exports could continue to set record highs if crude prices remain high.
” But how long this growth continues depends on several factors, including the role natural gas will play in our energy future. It is certainly going to be key in any kind of energy transformation, but for how long will be telling. For now, operators are enjoying a winning streak.”
Some of the key takeaways from the Enverus report showed that crude oil prices continue to test resistance at higher levels but it also stated that trouble is brewing as the Biden administration pursues the negotiations with Iran.
Natural gas production resumed in 2021 and is being driven by LNG exports and higher crude oil prices. But natural gas liquids production is expected to remain “relatively flat” in 2021 and grow in 2022.
The Enverus report also stated that 2021 budgets are set and “capex is flat year over year.”
Source: Enverus press release
