What Does Recovery Look Like?
Ponderosa Energy takes a stance on commodity price recovery in new 5-year market outlook report
In the latest installment of its market outlook series, Fundamental Edge, Ponderosa Energy answers the most pressing market questions everyone is asking, "when will oil and natural gas prices recover? how soon? and how high can they go?"
The report, What Does Recovery Look Like? presents Ponderosa's view of the crude oil, natural gas and natural gas liquids (NGL) markets and where these markets are headed in the next five years.
Key takeaways from the report:
- Oil prices impact natural gas production and natural gas prices impact oil production.Growth in production volumes of one commodity impacts supply and prices of the other. A higher gas price means operators don’t need as much for their crude barrels to break even, and vice versa.
- The oil markets remain unbalanced. Unless a structural change or "black swan event" effectively takes 2.0 MMb/d out of the market for the long-term, a price comeback in 2016 is unlikely.
- Recent price rallies have been driven by trader speculation, FOREX market dynamics and short-term supply disruptions. The prices have risen too high, too quickly.
- The natural gas market resets every winter; as long as normal winter weather shows up. The U.S. always ends the summer with storage inventories near 4.0 Tcf; prices will do whatever they need to do between now and then to make that happen.
About Ponderosa Energy
Ponderosa Energy, part of the Ponderosa Advisors group, provides leading due diligence services, strategic evaluations and detailed, actionable market intelligence for a range of investment opportunities. Across upstream, midstream, and downstream sectors, Ponderosa offers insight into current and future Oil, Natural Gas and NGL market dynamics and risks.
Source: Ponderosa Energy