Oil Prices ///
Despite restricted Russian supply, due to the war in Ukraine, crude prices slipped in April. WTI dropped 6.2% to $101.78/bbl, with Brent trading at $101.78/bbl, down 13.2% compared to March. Despite lower prices, U.S. operators finally started ramping up drilling activity, which is typically the case in a high-price environment.
The dire predictions by executives and consulting firms about the short-term/long-term effects of Covid-19 on the industry were overwhelming. The unrelenting onslaught of “we will never recover” or “nothing will ever be the same” seemed short-sighted.
Compared to fourth-quarter 2021, the Dallas Fed’s survey found that U.S. E&P activity surged in first-quarter 2022. However, there are still a few question marks that will linger through the year.
Despite WTI surging to an 11-year high of $108.50/bbl in March, U.S. shale operators resisted ramping-up drilling activity and remained disciplined with capital expenditures.
For the second time in a week, U.S. President Joe Biden managed to confuse the American public, taking advantage of the average person-on-the-street’s lack of knowledge about the global oil market.
With the havoc created by the war in Ukraine and the hard push to convert to renewables, operators are once again focusing on the high ROI that offshore prospects offer. There is an onslaught of good news and positive indicators that suggest operators are poised to significantly increase offshore development in 2022.
As many in the upstream industry anticipated, military action in Ukraine has sent oil and gas prices to their highest levels since 2008, with crude peaking at well above $100/bbl, with no end in sight.
More M&A activity is expected throughout 2022 within the OFS sector, as the market continues to consolidate during the balance of the current recovery.
Tensions between Russia and Ukraine, combined with surging demand, caused oil prices to increase approximately 20% this year, with WTI and Brent hitting $90.61/bbl and $96.43/bbl, respectively, in February.
Operators revised their proved reserves downward in 2020 and postponed development drilling.
The abundant supply of natural gas in the U.S is starting to pay dividends, in spades. The U.S. became the world’s number-one exporter of liquefied natural gas for the first time ever in December.
The year 2021 witnessed unprecedented development in the energy markets. Such events were contrary to conventional wisdom and have ramifications for the oil markets, for years to come.
While last year Covid seemed to be withering away, this year Covid is still around but definitely on the decline. Spot prices are high enough for everyone to make a profit, and then some, averaging lately in the high $80s to low $90s (perhaps too high).
Despite higher oil prices, U.S. shale operators have (until recently) resisted ramping-up drilling activity and remained disciplined with capital expenditures.
The average U.S. rig count for 2021 increased almost 9% from the previous year, though companies remained cautious with ramping up drilling activity.
U.S. oil production decreased mildly during 2021. A surge in gas prices during 2021 was influenced by increased demand despite Omicron and geopolitical unrest in Europe.
OPEC in the energy transition: What have we learned from the pandemic?