Crude oil futures settled higher on the New York market Mar. 9, and the contract for April delivery reached $50/bbl after falling sharply in previous trading sessions. Meanwhile, US natural gas futures prices for April delivery dropped on weather forecasts calling for higher-than-normal temperatures across much of the nation for several days.
Goldman Sachs said it expects oil futures will stay low awhile longer but analysts issued a Mar. 8 research note saying their earlier forecast for $40/bbl oil in the second quarter might be too low. On Jan. 11, Goldman Sachs had forecast $44/bbl in the third quarter and $58/bbl by the fourth quarter.
In addition, Goldman Sachs now believes its 2016 forecast of $65/bbl might be too high.
Goldman Sachs analysts Damien Courvalin and Jeffrey Currie in New York said, “US producers are preparing to ramp up activity later this year by successfully raising equity, reducing debt, and building an uncompleted well war chest.”
Sustained low prices are needed before declines in capital expenditures and lower rig counts result in lower production, the analysts said.
“While the build in US inventories has surprised to the upside, E&Ps are exhibiting a faster focus on financial discipline than we had expected,” they said of exploration and production companies.
Energy prices
The New York Mercantile Exchange April crude oil contract was up 39¢ to $50/bbl Mar. 9, and the May contract increased 19¢ to $51.66/bbl.
The natural gas contract for April plunged 16¢ to a rounded $2.68/MMbtu. The Henry Hub, La., gas price was $2.72/MMbtu, also down 16¢.
Heating oil for April dropped nearly a rounded 3¢ to a rounded $1.84/gal. Reformulated gasoline stock for oxygenate blending for April delivery was down less than a penny to a rounded $1.87/gal.
The April ICE contract for Brent crude oil declined $1.20, settling at $58.53/bbl, and the May contract dropped $1.10 to $59.08/bbl. The ICE gas oil contract for March dropped $6.50 to $575.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Mar. 9 was $54.53/bbl, down $2.10.
Contact Paula Dittrick at [email protected].
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.
