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2023 Oil and Gas Outlook

Posted December 16th, 2022 in Articles

It’s time for our annual look at the forecast for the oil and gas industry for the upcoming year. Here is what the U.S. Energy Information Administration (EIA) and other forecasters are predicting for 2023:

Forbes: Expect a Return of $100 Oil in 2023

Citing data from Enverus Intelligence Research (EIR), an article published by Forbes says that industry insiders should “expect a return of $100 oil in 2023.” This prediction is based on the Organization of the Petroleum Exporting Countries’ (OPEC) management of the global oil supply as well as the implementation of sanctions on Russian oil. According to Forbes, EIR is anticipating a return to the $100 level “despite near-term concerns about a possible recession.”

The EIA Predicts a Slightly Lower Oil Price Cap Next Year

In contrast to EIR, the EIA is predicting that the per-barrel price of Brent crude oil will remain below $100 next year. Currently, the EIA is forecasting a maximum price of $92.36 per barrel. This forecast is based on several factors, including:

  • The EIA is predicting that global oil inventories will see a net increase in 2023 after a slight decline in the first quarter of the year, and,
  • The EIA has revised its overall economic forecast to reflect “a slightly shorter and milder period of economic contraction.”

The Natural Gas Spot Price is Forecast to Decline in 2023

After jumping by $2.50 per million BTU at the end of 2021 to $6.48 in December 2022 (predicted), the EIA expects the spot price of natural gas to retreat to $5.43 in 2023. The EIA states that this forecast is based on an anticipated increase in natural gas production in the Permian Basin of 0.7 percent next year. The EIA also notes that U.S. storage levels remain above the five-year average. However, at least for the moment, industry insiders may want to take this forecast with a grain of salt, as the EIA reports that “the possibility of price volatility remains high.”

Analysts Predict a Strong Year Ahead for Oil and Gas Companies Spurred By a Mandate to Shore Up Supply

A report from Deloitte suggests that companies in the oil and gas industry may be poised for another banner year in 2023. Noting that the industry earned “record profits” in 2022, the global firm writes that oil and gas companies currently have “ample cash flow to fund their strategies in 2023,” as well as “a mandate to secure supply in the short term.” While the focus may remain on shifting to cleaner energy alternatives in the future, right now the focus for 2023 is on ensuring that countries around the world have access to the energy they need to operate within their current infrastructures.

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