The U.S. Energy Information Administration's (EIA) January Short-Term Energy Outlook (STEO) forecasts benchmark North Sea Brent and West Texas Intermediate (WTI) to average $53 per barrel (b) and $52/b, respectively, in 2017, close to their levels during the last three weeks of 2016. Average forecast prices rise to $56/b and $55/b, respectively, in 2018.
EIA's price forecasts have wide uncertainty bands, consistent with contract values for future delivery. For example, contacts traded during the five-day period ending January 5 suggest the market expects WTI prices could range from $35/b to $93/b (at the 95% confidence interval) in December 2017 (Figure 1). Strong demand and the recent agreement among members of the Organization of the Petroleum Exporting Countries (OPEC), as well as key non-OPEC oil producers, are putting upward pressure on crude oil prices. However, forecast increases in global production should provide downward pressure on prices and mitigate the potential for significant crude oil price increases through 2018. Despite the recent OPEC agreement, EIA expects global petroleum and other liquid inventory builds to continue, but at a slowing rate, in 2017 and 2018.
Despite increases in global oil inventories and U.S. oil rig productivity, market reactions to the November OPEC agreement to cut production by 1.2 million barrels per day (b/d) starting in January 2017 contributed to rising oil prices in December, when average Brent prices were $9/b above their November level. In response to the price movement, in the January STEO, EIA increased its crude oil price forecast for both Brent and WTI by $2 from the December STEO forecast for 2017. The slight price discount of WTI to Brent in the forecast is based on the assumption of competition between the two crude oils in the U.S. Gulf Coast refinery market.
Brent crude oil spot prices are expected to remain fairly flat over 2017 due in part to the responsiveness of U.S. tight oil production to rising oil prices in late 2016.
EIA forecasts Brent prices will slowly increase in 2018, beginning the year at $54/b in January and ending the year at $59/b in December. During this time, inventory builds will slow, putting modest upward pressure on prices. This will encourage production increases, particularly in the Lower 48 onshore. However, any production increases realized while the global markets are building inventories will moderate price increases, which will in turn limit additional production increases.
Total U.S. crude oil production is estimated to have averaged 8.9 million b/d in 2016, down 0.5 million b/d from 2015, with all of the production decline in the Lower 48 onshore. EIA forecasts U.S. crude oil production will increase to an average of 9.0 million b/d in 2017 and 9.3 million b/d in 2018. Forecast production in 2017 is 0.2 million b/d higher than in the previous forecast, reflecting assumptions of higher drilling activity, drilling efficiency, and well-level productivity than in previous forecasts. On a quarterly basis, EIA expects U.S. crude oil production to increase from 8.9 million b/d in the fourth quarter of 2016 to 9.4 million b/d in the fourth quarter of 2018. In both 2017 and 2018, crude oil production in the third quarter decreases from the previous quarter, when EIA assumes some production declines because of hurricane-related outages.
In the previous forecast, EIA generally expected Lower 48 onshore production to decline through the end of 2017. However, the new forecast reflects crude oil prices near or above $50/b, which have led to increased investment by some U.S. production companies, particularly in the Permian Basin. EIA expects that declines in Lower 48 production have largely ended and forecasts relatively flat production in the first quarter of 2017 at 6.7 million b/d, which will then increase to an annual average of 7.0 million b/d in 2018. Even modest increases in crude oil prices could contribute to supply growth in other U.S. tight oil regions.
EIA estimates global petroleum and other liquids production will increase through the forecast. Annual estimated and forecast production levels for 2016, 2017, and 2018 were revised up to 96.4 million b/d, 97.5 million b/d, and 98.9 million b/d, respectively.
Significant upward revisions to historical consumption in the countries of the Organization for Economic Cooperation and Development (OECD) in mid-2016 have led to a revision in the historical global balances. The latest data show global petroleum and other liquids stock drew by 0.5 million b/d in the third quarter of 2016. While production was unchanged for the third quarter of 2016 compared to the previous forecast, global consumption of crude and liquid fuels was revised up by 0.6 million b/d. Inventory draws in the third quarter, however, were followed by large builds in the fourth quarter.
EIA estimates that crude and other liquids inventories increased by 2.0 million b/d in the fourth quarter of 2016, driven by an increase in production and a significant, but seasonal, drop in consumption. The production increase largely reflects OPEC members ramping up production in advance of implementing the November agreement on production cuts. Global production is expected to increase by 1.6 million b/d in the fourth quarter of 2016, with OPEC accounting for 0.9 million b/d, or 55%, of this increase. Additionally, large seasonal consumption declines of 1.0 million b/d in the fourth quarter of 2016 contribute to the stock build. This trend is not expected to last as global consumption of petroleum and liquids is forecast to grow at a faster rate than production through 2018, resulting in tighter markets (Figure 2).
Annual consumption for 2016 is estimated at 95.6 million b/d and is forecast to increase by 1.7% to 97.2 million b/d in 2017, compared with a growth rate of 1.1% for production. However, 0.4 million b/d of this increase reflects estimated growth in the use of hydrocarbon gas liquids such as ethane and propane, reflecting growth in production from natural gas processing. Consumption is forecast to grow by 1.6% in 2018 and average of 98.7 million b/d for the year, while production increases by 1.4% and remains slightly above consumption at 98.9 million b/d on an annual basis. However, consumption is greater than production in the third quarter of both 2017 and 2018.
Something interesting to share?
Join NrgEdge and create your own NrgBuzz today
Oil and gas sector is one of the most lucrative sectors for job seekers from industries all over the world. It offers great salaries and benefits packages and an opportunity to travel and work overseas. Due to its high demand, scammers are preying on the vulnerable oil and gas workers. To ensure you don’t fall prey to their mischievous tactics, we would recommend reading our guideline below:
How does scamming occur?
The scammer poses as an employer or recruiter of an oil and gas company or he may claim to be an employee or recruiter for a job consultancy firm catering to the oil and gas industry. They offer irresistible employment opportunities and often demand money in advance to conduct further processes. Money is often demanded on the pretext of work visas, travel expenses, background or credit checks that the job requires.
What do scammers want from you?
It is important to understand what the scammer's agenda is so that it helps you shield yourself from getting conned:
To extract money: On the pretext of getting you a job in the energy sector employing any of the tactics mentioned above
For identity theft: scammers look for valid identity of people and ask for confidential personal details including bank details to commit fraud through your name or to withdraw money from your account.
Whatever be their modus operandi, their goal is to either separate you from your cash or accomplish an identity theft. The bigger problem is, the scammers are getting better at their game and coming up with innovative ideas to lure innocent job seekers. In oil and gas industry, the scammers are targeting the job seekers from overseas, immigrants or contractors as they feel it is easier to attract them on the pretext of work permits, high salaries, paid travel, better lifestyle in the first world countries.
How to spot a job scam and keep yourself secure?
There is always a difference between real and fake, all you need to do is be watchful to notice the underlying discrepancies. There is a pattern that scammers usually follows, which is discussed below. Make sure you watch out for these red flags when you receive any job offer next time:
Free email provider - No legitimate hiring agency or company will use the services of free email provider like Gmail, Hotmail, or Yahoo. So, if you are receiving an email or have been requested to share your details on emails that use free email services, then be extremely cautious. The scammers try to trick the job seekers by using an email address that looks authentic for instance: [email protected]. It is important to notice here that the ‘xyz’ part of the email ID is usually a gmail, yahoo, etc. which is a free email address. A legitimate job provider would never use.
Fake or new company name - If company name or oil and gas recruitment agency name is mentioned along with the free email id, then do a quick search on the company. Verify its existence and contact them via official email address and contact numbers mentioned on the website. Check their social media presence too. If the website and social media page look new while the company claims to be in business for a substantial amount of time, know for sure that there is something fishy.
Bad grammar and confusing job details - The scammers usually do not pay much attention to structure the mail. You can spot grammatical errors and even the job descriptions are not explained well or is completely different than your skillset and experience. Any authentic mail from a company or oil and gas recruitment agency will ensure an error-free, concise, and clear communication
Fee to conduct a job interview - No legitimate oil and gas company or recruitment agency will ever ask for money to conduct a job interview or to apply to job positions. If the mail says, the money will be refunded once you appear for a job interview, then please do not trust such claims as it is always bogus.
Asking for confidential personal information - Anyone asking for information that you will never put on CV, is a warning sign. It includes your bank details, passport copy, identity cards, your current residential details and so on. No genuine company will ever ask for such details before you sign the offer letter. If by chance, you have shared your bank details or another confidential detail to the scammer, contact your bank and email service provider and register a complaint against it.
Unknown source - There are countries who have strict spam rules and until you subscribe or give consent to the company, they cannot send you emails. So, if you receive an email from a company you haven’t contacted or have not applied for jobs, then be cautious it might be a scam.
The principle on which scammers operate is “Too good to be true”. Don’t entertain any job offer that offers a position, you are not qualified for or offers a salary which is unrealistically high. In the oil and gas sector, be careful not to reveal your passport/work visa details to the scammer. Remember, if you find anything which is way beyond the realistic expectations, then trust your instincts and drop the offer and do not respond.
See our infographic below for a quick summarized glance -
If you are looking for a job in the Energy sector then sign up today to stay updated with the latest industry news, apply for jobs and network - https://www.nrgedge.net/jobs
Searching for the right talent is often a tedious chore for the HR. However, with technological improvements, the usage of app-based recruitment has increased manifold. Recruiters and job seekers are increasingly adopting this new method. A mobile application simplifies the labor-intensive and time-consuming recruitment task and comes loaded with features that help to automate the recruitment cycle. For all the good, app-based approach can do, it still comes under fire from the critics. Here's our take on the pros & cons of App-based talent search.