Looming recession risks prompt oil and gas price corrections
Calgary, Alberta (August 24, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest FundamentalEdge report focusing on its medium-term outlook for oil and natural gas.
“The surging dollar, signs of weakening U.S./Chinese economies and building recession risks outside North America have prompted a price correction with Brent falling below $100/bbl,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research. “Demand headwinds are building but supply remains tight with no relief on the horizon. As the downside risks build, we expect Brent to consistently trade in the low $90s/high $80s next year.”
Al Salazar, co-author of the report and senior vice president of Enverus Intelligence Research, added, “Hot summer weather has kept gas demand strong and inventories low relative to the five-year average, despite the Freeport LNG outage (2 Bcf/d). Limited options for fuel switching and strong industrial demand support current prices (~$7.00/MMbtu) until spring of next year when we anticipate supply growth will push prices lower.”
Key takeaways from the report:
- EIR now expects U.S. oil supply to grow by 0.95 MMbbl/d E/E, concentrated in the Permian. Cost inflation and availability of crews remain significant headwinds to this forecast.
- Rising risks to global economic growth have prompted EIR to downgrade their 2022 E/E global oil demand growth forecast to 1.5 MMbbl/d from 1.65 MMbbl/d. Similarly, EIR has downgraded its expectations for 2023 to 1.3 MMbbl/d Y/Y from 1.6 MMbbl/d Y/Y growth.
- S. industrial natural gas demand continues to increase, up 1-1.5 Bcf/d Y/Y as the U.S. threatens to replace uncompetitive European industrial production. This provides a structural advantage to the U.S. industrial sector and is bullish for natural gas demand domestically.
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About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.
