American oil companies are not going to make some fundamental changes in case oil prices start going up and down within the $30-35/b range. The thing is, such prices are said to be still comfortable for them.
According to Goldman Sachs Group Inc., oil prices around $35/b are neither too high not too low. They say this is may well be the price to start buying the stocks of American oil producers and miners. Even if there is a period of prices between $30/b and $35/b, they are still not going to make any serious changes to their policies, especially as the companies expect WTI prices to go all the way up to $55-60/b in a more distant future. Goldman Sachs experts say this may happen in 2017.
On top of that, they predict the average price for Q2 2016 is going to be exactly $35/b. the average price for the year is expected to be around $38/b. Next year, the experts predict a price increase all the way up to $57,5/b as the average price for 2017. Still, the experts believe that the current oil prices are above the production costs. With that being said, they see their forecast for this quarter as an optimistic scenario. At the same time, they recommend making use of the current situation to capitalize on U.S. shale oil stocks. The lit includes:
Whiting Petroleum Corp., Continental Resources Inc., Encana Corp., Anadarko Petroleum Corp., Cenovus Energy Inc., Hess Corp. as well as PDC Energy Inc., Diamondback Energy Inc., EOG Resources Inc.
It is also interesting to note that the mentioned Goldman Sachs analysts believe in the likelihood of OPEC and other major oil exporters agreeing on the freezing their production quotas at some point in the future. At the same time, they don’t deny the chance of OPEC boosting their oil production by 600K and 500K barrels a day in 2016 and 2017 respectively.
In the meantime, U.S. oil industry may see an oil production cut by 725K barrels a day this year. Another interesting fact to pay attention to is that the U.S. shale oil production is reported to get more than 30% cheaper. According to the research conducted by IHS Global Inc., a consulting firm hired by the U.S. Department of Energy, U.S. oil companies managed to cut their development and production costs by 1/3 thanks to introducing some innovative solutions last year. To be more specific, the costs are now at the lowest point in 10 years. It should be noted that IHS Global Inc. do some research at the USA’s biggest shale oil fields – Permian, Marcellus, Bakken, and Eagle Ford.
The experts say that if the reduced production and development costs are going to stay that low, this is definitely going to affect oil prices in the long run. In the meantime, U.S. shale oil producers resumed their production activities in March 2016. According to Oasis Petroleum and Pioneer Natural Resources, they are going to restore 70% to 85% of the production capacity in the coming months.
