The approach of the final quarter of 2017 seems an opportune time to check on the state of the U.S. oil and gas industry, and its outlook for the remainder of the year. While Hurricanes Harvey and Irma definitely caused significant disruptions in the nation's oil and gasoline delivery systems, the reality is that those disruptions will be rapidly resolved and the storms really will not make any lasting impact on the global oil and gas markets.
This year has been amazingly stable overall, especially when compared with the rampant instability during 2015 and 2016, and the various determining factors would appear to indicate that the industry is in for a good deal more stability ― some would call it stagnation ― for the year's final 100 days.
Corporate Processes Continue to Prevail
As I've discussed a couple of times since June, so much of this seeming stability is in fact dictated by the nature of internal budgeting processes, especially within the mid-size-to-large corporate independent producers that dominate drilling markets in the United States. These big producers set their budgets for the second half of the year back in April and May, with an expectation of West Texas Intermediate (WTI) crude prices hovering within a range of $44 to $48 per barrel, and a natural gas price of ~$3.00/mmbtu.Read the rest of this article by clicking here.
Because these dominant companies began executing on those second-half budgets on July 1, the overall rig count initially stagnated for a few weeks, and it has now slowly fallen by ~25 rigs over the last five weeks. A variety of factors have combined to move the crude trading range up slightly, to a range of about $47 to $50/bbl, but that's not enough of an increase to create momentum within these companies to significantly increase their capital budgets for the remainder of the year.
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