Forecast

The catastrophic demand decline initiated by coronavirus lockdowns significantly damaged the U.S. oil industry, with oversupply, historically low storage capacity, and low prices. Operators responded by stacking rigs and shutting-in production.

As the world holds its collective breath over Covid-19, Canada’s oil patch has shifted drastically to pure survivalism. Most measuring sticks of industry health show historic lows, while lack of market access continues to hurt producers.

World Oil has finished compiling the 2020 mid-year forecast update for drilling and production and, if projections hold true, the number of oil wells drilled in the U.S. annually will reach lows not seen since the 1930s, or even further back.

Global capex to grow moderately, but less than last year

Spending discipline slows drilling activity in shale plays

U.S. reserves reach new record-high

U.S. crude output surges, overproduction wallops gas prices

Canada re-adjusts to low prices, limited access

While attention is focused on the national elections, there are ominous policies gestating at the state and local government levels.

Improved offshore activity, coupled with significant conventional oil development programs operated by NOCs, should push drilling marginally higher in 2020.

U.S. on a downward trajectory as shale industry matures

As 2019 began, our editorial advisors, like many of us in the industry, had hopes for an improved market during the course of the year. Unfortunately, that has not come to pass, and 2019 will be remembered as the year that the U.S. shale revolution sputtered and leveled out. The confinement of the oil price in the low-to-high $50s for most of second-half 2019, for WTI crude, is remarkable. This also will be remembered as the year that OPEC+ frequently had to defer to the U.S., as the new swing producer, to help balance supply with demand. And while the “quieting” of U.S. shale should continue through most of 2020, there are some brighter spots in the global E&P market. There is ample evidence that offshore activity is slowly, but surely, improving, particularly outside North America. And conventional oil and gas, outside the U.S. and Canada, are showing some life, due in part to increased spending and activity by NOCs, particularly in the Middle East. Meanwhile, the six most senior members of World Oil’s Editorial Advisory Board again provide their thoughts on this year’s market and what might be in store for 2020. In the process, they examine a wide range of industry trends, including the pillars of success; the unique, continuous transition of the UKCS; hydrogen’s role in the energy mix; getting the message right to the public; going back to the top of the slide; and entrepreneurship helping to foster good energy policy.

After an abysmal 2019 for U.S. energy mergers and acquisitions, investors are signaling to oil executives and investment bankers that the days of high-premium deals are over.

Oil rose for a fifth session, the longest run of gains since July, as a bigger-than-forecast decline in U.S. crude stockpiles eased oversupply concerns.

OPEC+ output cuts have stabilized the global oil market but can’t last forever, Russia said as uncertainty persists over the future of the agreement beyond March.

Oil prices are likely to remain in check during 2020 as OPEC+ production cuts are offset by higher output from other countries and a mixed outlook for demand, according to analysts.

Equatorial Guinea forecasts investments of at least $1.4 billion in its hydrocarbon sector next year through the development of oil projects and an increase in exploration.

Energy equity carnage was alive and well throughout 2019, and the start of 2020 could bring more of the same for the beaten-up sector, though some analysts are turning positive.

Global oil markets still face a surplus next year even if OPEC and its partners deliver newly-announced production cuts in full, the International Energy Agency said.

Norway’s oil lobby raised the investment forecast for the country’s offshore industry for the coming years, even if it still sees a sharp drop in 2021 amid a lack of big new projects.

The U.S. Energy Information Administration revises the U.S. crude oil production forecast it publishes in each Short-Term Energy Outlook based mainly on two factors: updates to EIA’s published historical data and EIA’s crude oil price forecast.