As uncertainties abound in the crude market, it’s likely that gas and liquids markets could experience more volatility.
There is growing sentiment that the market has decided enough is enough and decided to set a floor for crude prices.
Commodity prices continue to stutter with modest improvements, though a warm summer could spur a stronger back end of the year.
WTI prices improved this week after hitting a 12-year low, but challenges remain as Iranian crude re-enters the global market.
Prices continue to search for a bottom even as heating demand increases.
Gas prices are expected to have limited volatility in 2016 due to a tight ceiling and floor.
There are many reasons for the negative outlook for prices, but the primary one is that markets are oversupplied across the board. It is impossible for liquids, crude or gas prices to improve for very long because supplies are saturating each of these markets.
OPEC’s decision to continue all-out production placed further downward pressure on commodity prices as West Texas Intermediate (WTI) crude prices fell to $36.75 per barrel (/bbl) on Dec. 10. This is close to the low for the year and it is expected that this will help curtail production enough that the market could begin to rebalance by the fourth quarter of 2016, according to Barclays Capital.
It is possible that prices could grow further in the short-term, but the near-term outlook is still negative as prices are still challenged due to oversupply.
This year has been forgettable when it comes to oil, gas and NGL prices, but how much better can 2016 get?
Commodity prices were generally down this week, but there was some light peeking through the darkness.
The headwinds facing natural gas prices have been known for months, but they came to a head this past week with the mild temperatures with the likelihood that storage levels will continue to build much later than normal.