Reports and projections
It’s been a volatile week for oil and natural gas prices as companies and analysts sift through production results and projections.
It’s been a volatile week for oil and natural gas prices as companies and analysts sift through production results and projections.
Several of the major integrated oil companies reported earnings this week and last. Many of the large independent producers — including Devon Energy Corp., Chesapeake Energy Corp. and Continental Resources Inc. — will report their earnings next week.
Some oil traders may have been spooked earlier this week when the U.S. Energy Information Administration reported domestic oil production hit another record high this week at 10.27 million barrels per day, up 20,000 barrels per day from the previous week.
The production growth has led some analysts to speculate that the industry could again flood the market and lead to lower prices. Others, however, discount the concern, pointing to growing demand and the U.S. industry’s increased focus on cost reduction.
Domestic benchmark West Texas Intermediate crude prices dipped to $59.19 on Tuesday, down more than 10 percent from its recent peak of $66.14 on Jan 16. The oil price change largely has tracked widespread volatility in the broader market over the past few weeks.
The price recovered 74 cents Thursday to $61.34 a barrel, even as the natural gas price slipped a penny to $2.58 per thousand cubic feet.
Continental Resources executives said Thursdayprices likely willremain strong this year.
“We’re expecting oil prices will be in the ballpark of where they are now or a little bit higher by year end,” Warren Henry, Continental’s vice president of investor relations and research, said in an interview Thursday.
“There may be some volatility, but OPEC and Russia seem committed to maintaining their restrictions and their commitment to working down the oversupply in the international market. We think it’s going to be fairly steady in the area it is now, maybe 5 to 10 percent higher.”
The Organization of Petroleum Exporting Countries and Russia have cut their production for more than a year in a — so far successful — attempt to drive prices higher. The group has agreed to continue the cuts through 2018.
Continental executives set the company’s 2018 budget assuming an average oil price of $60 a barrel but have avoided locking in production prices, an indication that they expect prices could strengthen further.
“Demand looks really good worldwide,” Henry said.
We’ll get a better picture next week of what other Oklahoma producers are expecting in terms of commodity prices and demand as more companies detail their 2018 budgets and drilling plans.