Enverus: “unseasonably warm weather and record high supply” slashed natural gas prices

(WO) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, has released its latest quarterly FundamentalEdge report focused on global drivers for oil and gas prices in 2023, the five-year oil and gas supply and demand outlook, as well as price forecasts.

“Unseasonably warm weather, record high supply and delays to the Freeport LNG restart inflated our end-of-winter natural gas storage estimate. This higher storage projection worsens the oversupply already expected for midyear, pushing our summer price forecast down by as much as $1 MMBtu from previous outlooks,” said Bill Farren-Price, director of EIR.

Meanwhile, oil prices are expected to rise on tighter balances in the year ahead. “We expect rising oil demand in the second half of 2023 to spark inventory draws and higher prices, with a price call for Q4 an estimated $20-$30 per bbl above the current forward strip,” Farren-Price added.

Key takeaways from the report

Bullish oil price outlook is driven by anemic supply growth and moderate projected demand.

The Permian Basin will drive the most global oil supply growth. However, Enverus expects supply will struggle to offset Russian losses and OPEC will backstop with fresh cuts if Brent prices fall below $70 per bbl.

Gas balances have a different story; Everus forecasts sub-$3 NYMEX in 2023 supported by record warm winter weather and strong U.S. gas supply.