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(Oil & Gas 360) – Switching Back To An Employer-Driven Economy (From Ruler-Driven) Restoring Upward Mobility Of The Masses Will Have A Profitable Oil & Gas Drilling Boom.
Energy Market Assessment: Restoring upward mobility of the masses will have a profitable oil & gas drilling boom- oil and gas 360
While many are worried about stock market volatility, interest rates, tariffs and other uncertainty, The Climate Changing to stimulating is driving our bullish natural gas outlook. Last week’s 80 Bcf draw in working natural gas inventory has it down at 1,760 Bcf on February 28 (Figure 9, red line). The Climate Changing to colder has changed inventory now from the bearish top of the historical range down toward the middle of the range. It already lower than the end-of-Winter low last year (blue line) and two years ago (bold line) is now making refilling inventory for Winter a new gas demand component.
Figure 9: U.S. Working Natural Gas Inventory (Src: U.S. Energy Information Administration)
Existing infrastructure, infrastructure trends and The Climate Changing to stimulating will now need a Drilling Boom to fuel Winter and Summer. This Winter’s cold-air incursions have had the quantity of natural gas withdrawn from inventory down at the bullish bottom of the historical range (Figure 10, red line). And while the switch to daylight savings time encourages “Winter-is-Over” thoughts, awareness of the need for natural gas supply increasing will be helped by bullish inventory change comparisons to last year (blue line) and two years ago (bold line) up at the bearish top of the historical range. One-week last Summer extracted gas from inventory. We predict greater effort to fill needed this Summer is a bullish surprise.
Figure 10: Weekly Change in Total U.S. Natural Gas Working Inventory (Src: Calculated from U.S. Energy Information Administration data)
U.S. crude oil supply growth smaller than what it has been/ what is expected fuels our bullish oil outlook. U.S. lower-48-state crude oil production approached 13 million barrels per day (mmbd) five years ago (Figure 11, green dot). It then dropped with the Coronavirus Recession down to around 10.5 mmbd four years ago (green line). The drop resulted from the number of rigs drilling for oil dropping from 680 to 180. Oil demand and activity rebounding had the count back up to 627 as year 2022 ended. The rise provided a nice year-over-year (YOY) production increase two years ago (bold line versus green) and last year (blue line versus bold). However, 486 rigs drilling for oil this week is too few to supply consensus-beating demand growth.
Figure 11: U.S. Lower-48 State Weekly Crude Oil Production (Src: Department of Energy data)
Natural gas supply growth fallen behind demand growth fuels our bullish natural gas outlook. Lower-48-state natural gas production reached 107 Bcf per day (Bcf/d) at the end of 2019 (Figure 12, green dot). It then declined with the recession to a 99.5 Bcf/d year-2020 low (green line). Rigs drilling for natural gas dropped from 110 to 71. The rise to 160 rigs in January 2023 has production up at 118.5 now (red line) but only 101 rigs now has ended YOY growth. Infrastructure trends needing much more, fossil-fuel production growth pursuit down, Over There growing too, conventional energy still low, prior rulers working to have it slow, + much poorly understood has conventional-energy-Bullish set up.
Story Continues
Figure 12: U.S. Monthly Natural Gas Gross Withdrawal Production Lower-48 States (Src: U.S. Department of Energy, Form 914 data)
By oilandgas360.com contributor Michael Smolinksi with Energy Directions
The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of Oil & Gas 360. Please consult with a professional before making any decisions based on the information provided here. The information presented in this article is not intended as financial advice. Contact Energy Directions for the full report. Please conduct your own research before making any investment decisions.
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