trending Market Intelligence /marketintelligence/en/news-insights/trending/5WYIKB6S59l6HV2LoYf8Og2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Analysts expect oil and gas prices to rise as production, demand patterns shift

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Analysts expect oil and gas prices to rise as production, demand patterns shift

Oil and gas sector observers expect commodity prices to move up amid shifting global demands and fluctuating production volumes, while weather and infrastructure constraints have driven near-term price spikes in constrained areas.

S&P Global Ratings recently highlighted the volatility of the global oil market when it revised its Brent crude price forecast for the second time in less than three months. Initially dropping the outlook from $65 per barrel to $55/bbl in January, on March 20, the analysts raised their forecast for the price of Brent crude oil to $60/bbl this year, due to changes in the world economy and ongoing production cuts from OPEC and Russia.

The production cuts have led to a rally in oil prices, primarily for Brent, which had climbed to $65.06/bbl by March 15, compared with a closing price of $50.57/bbl on Dec. 28, 2018, according to the rating agency. "[I]t appears that production cuts by Russia and OPEC will continue to support oil markets for the foreseeable future."

The analysts, however, do not see oil prices rising uniformly as they left their projection for West Texas Intermediate, or WTI, crude oil for the year unchanged at $50/bbl. "While the price of WTI has also responded positively, it has not rebounded quite as strongly as Brent. This is largely due to expectations about the continuing growth of oil production from the Permian Basin."

Moody's sees an increase in prices on the horizon for gas, as well, albeit over a longer time frame. The rating agency said it expects domestic and international markets for U.S. fuels to catch up with the nation's shale surplus in the coming years.

"We see rising demand as [U.S.] power generation switches to gas from coal, along with LNG exports globally and piped exports to Mexico, as well as demand from a [U.S.] petrochemical renaissance catching up to the abundant and inexpensive natural gas supply in the medium term," Moody's analysts wrote in a March 21 report.

But near-term factors, such as the lack of North American midstream infrastructure, will continue to dampen U.S. gas prices until more pipelines and LNG facilities come online to relieve oversupplied regions, Moody's analysts said. "As these constraints disappear, natural gas prices should rise gradually toward oil equivalent prices over the long term."

Total U.S. gas demand for the week ended March 20 slightly fell to 91.3 Bcf/d from 93.1 Bcf/d in the same period of 2018, the U.S. Energy Information Administration said March 21. In line with expectations that the burgeoning LNG segment of the industry could ultimately put upward pressure on gas prices, LNG pipeline receipts were up to 5.5 Bcf/d, compared with 3.1 Bcf/d in the year-ago period.

Offsetting the uptick in demand, total U.S. gas supply was up materially in the week ended March 20 to 93.5 Bcf/d, compared with 85.7 Bcf/d during that week in 2018.

Nevertheless, low demand nationwide did not prevent major gas price spikes at Southern California Gas Co.'s SoCalGas Citygate. Colder-than-normal weather, along with continued pipeline and storage restrictions, have pushed SoCalGas Citygate gas prices to record highs this winter, the EIA said in a March 19 note.

"Average spot natural gas prices at the Southern California Gas Citygate are on record pace so far this winter, averaging $7.23/MMBtu" since Nov. 1, 2018, according to the EIA. "The spot price of natural gas at the SoCalGas Citygate has averaged about 76% higher than the average price at this trading hub for the same period during the winter of 2017-18." Spot prices peaked at $21.50 on Feb. 21 and were routinely above $10/MMBtu for much of February, according to S&P Global Market Intelligence data.