The State of Oil and Gas, November 15, 2016

Oil prices have been dropping, getting below $44/bbl at one point.  All because nobody believes OPEC will be able to put a production cut deal in place.

Donald Trump has won the Presidency, and nobody’s exactly sure what that’s going to do for oil prices.  This CNBC article throws out a few of the things that are going to factor in, such as a weakening dollar, better relations with Russia encouraging investment in Russian oil infrastructure, and Trump possibly re-instating the sanction on Iran.  Overall, the article thinks the price of oil will go down.

One source thinks that natural gas prices could rise above $25/MCF this winter.  The article doesn’t specify, but I suspect that’s the price to consumers, not the price at a hub.  Still, that’s considerably more than the current price to consumers.

Gas production for the United States as a whole dropped a lot in October.  The disappointing news is that the Marcellus/Utica region decreased production because it didn’t have anywhere to send the gas. This in spite of the Cheniere Energy gas-to-liquids plant in Louisiana ramping up.  Based off this article, we’d say that the southern part of the country is going to see higher natural gas prices, while the northern part of the country is going to see lower natural gas prices.

Deep sea rigs are being taken out of idle in a place called the Cromatry Firth, a natural deep harbor near the North Sea oil fields.  Since oil prices are down off their high of $52/bbl, it’s safe to assume that the oil industry foresees demand for oil increasing in the next year.  You don’t fire up deep sea rigs without a really good reason.

Oil prices have been as low as $42/bbl in the last few days, but are back at $45/bbl today, November 15, 2016.

The big news, of course, is yet to come.  Between now and our next update OPEC will meet and announce that it has not agreed to cut back or freeze production.  Kidding.  They surprised me last time with a framework for a deal.  Since then, of course, key players have walked back from that framework.  But the fact that they were able to get a framework in place makes one think that it’s possible they could get an actual agreement.  We’ll see.  I still think it’s highly unlikely.  Oil futures traders are hopeful, though.  That’s probably why oil prices are up to $45/bbl.

Hope everyone has a great Thanksgiving holiday next week!