Crude Oil Prices In 2017 –
Stormy seas or easy crusing for crude oil prices in 2014 Photograph credit: BP p.l.c.
Crude oil costs have been comparatively stable the past few years. In America, the worth of West Texas Intermediate crude oil has averaged about $ninety five per barrel. That is anticipated to continue in 2014. Overseas, the worldwide benchmark Brent crude oil has traded a lot increased with an average of greater than $one hundred ten per barrel the previous three years. Let’s take a better look at what we can anticipate from international crude oil costs in 2014.
In response to the U.S. Vitality Data Company, international oil producers will see crude oil prices moderating in 2014. Its present short-term energy outlook projects that Brent crude oil costs will common about $104 per barrel in 2014. That is down from the 2013 average of $108.Forty one and the greater than $111 in the prior two years.
Most analysts agree that Brent crude oil prices will fall in 2014. The average analyst estimate is around $105 per barrel. Analysts see lower demand and better supplies weighing down the price of Brent crude oil in 2014. That said, names of natural gas stocks the International Power Agency did just recently increase its 2014 oil demand forecast because it sees U.S. consumption rebounding in 2014. Bottom line, rising supply ought to keep oil prices from spiking in 2014 while demand needs to be excessive enough to maintain Brent-based mostly crude oil prices properly over $one hundred per barrel in 2014.
How this affects crude oil producers
That’s welcomed news for world oil giants like ExxonMobil Company (NYSE:XOM) and BP pcl (NYSE:BP) as $one hundred oil is very profitable. That value has inspired ExxonMobil and BP to take a position tens of billions of dollars to open up new sources of oil and fuel around the globe. That said, what we aren’t yet seeing is an increased charge of capital spending from these oil giants.
BP just lately reiterated that it names of natural gas stocks expects its 2014 capital spending to be round the identical $25 billion level as it was in 2013. In the meantime, Chevron Company (NYSE:CVX) truly lower $2 billion from its 2014 capital spending plan. That is about 5% lower than the $42 billion that America’s second-largest oil firm spent in 2013.
Slipping oil prices in 2014 are additionally affecting the place oil giants spend capital. For instance, Chevron is not spending very much money in America this 12 months. Overall it is spending about 20% of its capital to drill in the U.S. Its large size has made it more durable for the company to profit from America’s shale boom the place smaller, nimbler rivals are actually profitable. That’s one purpose we’re seeing a slimmed down ConocoPhillips (NYSE:COP), however, spend greater than half of its capital price range in North America in 2014. ConocoPhillips can use its oil-centered drilling within the U.S. to gas production and margin growth of 3%-5% yearly by 2017.
The other major development we’re seeing is that corporations like Chevron are really engaged on winding down peak spending. For Chevron, 2014 will be the peak spending 12 months for its Australian LNG initiatives. The same could be said for ExxonMobil, which wrapped up construction on Section I of its large Kearl oil sands venture this previous yr. While ExxonMobil has a number of different projects in the works, it’s doubtless to affix Chevron and BP by not increasing its capital spending sooner or later. Additional, if oil costs proceed to track decrease sooner or later, we could see spending from oil corporations really start to drop off heading into 2015.
We are starting to see international oil giants head into harvest mode as many major tasks are beginning to come back on-line. As a substitute of reinvesting the flood of new profits, sagging oil prices aren’t attractive these giants to proceed spending. Bottom line, if crude oil prices do fall in 2014 it may mean that investors get bigger dividend boosts as corporations forsake investing in unappealing production progress initiatives that don’t meet return standards. That, nevertheless, could really set the trade up for higher prices just a few years down the street.