Texas energy spokesmen support Enverus Intelligence Research’s expectation that the price of oil will hit $100 per barrel in the fourth quarter this year.
State Rep. Brooks Landgraf and leaders of the Texas Independent Producers & Royalty Owners and Panhandle Producers & Royalty Owners associations say EIR hit the nail on the head.
The Calgary, Alberta, Canada-based EIR says the key drivers will be all-time high global oil demand, insufficient North American supply growth and OPEC intervention to hold down production.
“We believe the oil markets are largely balanced and we’re headed for material crude and product stock draws in the second half of the year,” said Enverus Senior Vice President Al Salazar. “Furthermore, record oil demand has offset supply out-performance from Russia, Iran and Venezuela.
“We are sticking to our bullish price call for now and have outlined a checklist of fundamental indicators that must be met by Aug. 31 or revisions to our outlook will follow.”
Salazar said those indicators are weekly EIA data, China’s economic sentiment and U.S.- driven supply agreements with sanctioned producers like Iran.
“The current market fundamentals are bullish as global demand hit record oil consumption of 101.5 million barrels per day in the second quarter of this year,” he said.
Landgraf said the Permian Basin is a key source of the optimism.
“I’m no economist, but with depleted oil reserves and the demand for oil staying higher than what liberals predicted, it won’t surprise me one bit if oil hits triple digits before the end of the year,” said Landgraf, an Odessa Republican who chairs the Texas House Environmental Regulation Committee in Austin.
“Make no mistake, rig counts and production in the Permian Basin are way up and more energy jobs are being added every single day in Texas and the nation. So if oil hits $100, President Biden deserves 100 percent of the blame.
“Texas has all the resources available to keep costs at the pump low and make the United States energy independent if the federal government would just stay out of the way,” Landgraf said. “That’s why I will continue to fight to pass Texas STRONG to reinvest state severance tax revenue in the communities that produce Texas oil and natural gas.”
TIPRO President Ed Longanecker said from Austin that his outlook remains bullish for the second half of the year despite continued market volatility driven by recessionary fears and economic concerns.
“I believe many analysts are underestimating the impact of demand growth in China, the potential for further supply disruptions, whether geopolitical or operational in nature, and the impact of OPEC members’ commitment to maintain higher prices,” Longanecker said. “Supply will remain tight this year and demand will reach record levels.
“Under this scenario higher commodity prices are highly likely later this year, but how these market factors play out will determine if we stay in our projected $75-$80 range for West Texas Intermediate crude or reach the $100 threshold.”
PPROA President Judy Stark said higher oil prices are probable.
“Right now we still have some surplus, but that will deplete as we fill the Strategic Petroleum Reserve,” Stark said from Amarillo. “China’s COVID recovery moves forward, Russian exports drop, war continues in Ukraine and the Biden administration remains indifferent to the lack of investment in domestic production as inflation slightly reduces.
“Saudi Arabia cut production and oil output will remain unchanged; however, capacity will likely become a problem later this year and into 2024, resulting in higher prices per barrel.”