Summer Signals: Continued Price Volatility For Oil And Gas

Sharp rally in Henry Hub has exceeded early year price forecasts

Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest Fundamental Edge report focusing on its five-year supply, demand and price outlook. The report confirms that nearly three months into the Ukraine war, oil and gas markets remain tight with Brent oil trading well above $100/bbl and Henry Hub gas above $8/MMBtu. This edition of Fundamental Edge dives into the company’s medium-term expectations for supply, demand and price for both commodities as well as risks to our forecasts.

“We see a tangible risk that oil markets will become volatile again later this year and into 2023 when the stock releases end. The release of oil from the Strategic Petroleum Reserve buys time for producers in the U.S. to push harder and for Iran nuclear diplomacy to bear fruit,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research.

Al Salazar, co-author of the report and senior vice president of Enverus Intelligence Research, added, “Neither LNG tightness nor a limited capacity to switch power generation from gas to coal seem likely to change quickly in the near term. This in turn implies that prices are likely to remain elevated until U.S. supply infrastructure becomes able to accommodate supply growth sometime next year or demand buckles under the weight of soaring prices.”

Key takeaways from the report:

• The sharp rally in Henry Hub gas prices has exceeded all early year price forecasts and reflects strong LNG demand as Europe faces up to Russian supply risks as well as limitations for gas-to-coal switching in the U.S. power generation sector.
• Enverus Intelligence Research has nearly halved its early 2022 demand growth expectation for oil to 1.65 MMbbl/d and see further headwinds from rising interest rates and a marked slowdown in the Chinese economy as the country battles a new COVID outbreak in major industrial and population centers.

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. For more information, visit 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.