OIL AND GAS EDITOR
There has been a substantial rise in the price of oil in 2017 and there is every possibility it can continue its upswing.
After soaring from $25 a barrel to almost $150 a barrel between 2000 and 2014, crude oil provided a positive upswing, settling into the $90 a barrel area. It had its moves up to $100 a barrel and down below the $90 a barrel price for a significant period of time.
But, things began to happen in mid 2014 that brought about a significant plunge below $27 a barrel in early 2016.
Since that time there has been a steady climb to where it is in the area of $60 a barrel as this article is being written.
In a long range chart, there is resistance in this $60 a barrel area. The market penetrating this level and holding would be a significant signal that a further rise can be anticipated.
The price of crude meandered in the $58 to $62 a barrel area in May to June 2015. As we begin the year 2018, crude is right in the area of $60 a barrel and I figure it will take a bit of churning in that area before there’s a bonafide upswing in the price of oil. The $60 area is recognized in charting as a resistance plateau until there’s a move upward out of that area that is significant enough, volume-wise, to where it signals a move upward. Then $60 would become a support level in downswings in price in the future.
I feel the price of crude at that point would likely move upward in a zigzagging fashion, full of twists and turns, and it may take all of 2018 before it can reach the $65 a barrel area. That would be good, because any larger upward movements in a short period of time would lend more support to more of a backing and filling aspect with more uncertainty.
There is every reason to believe that the price of crude can reach an area of between $65 to $75 a barrel in 2019.
In an earlier article that I had written, I mentioned that a move in the price of oil to $65 to $75 a barrel would be good for both the United States petroleum industry as well as consumers. That pricing area would keep the economy moving in a positive way allowing energy companies and the general public to benefit.
Another significant factor leading to a continued rise in the price of crude is the fact that oil companies discovered less oil and gas in 2017 than any recorded year. This will affect a seriious threat to supply levels in the next decade. Limited upstream exploration budgets have been ‘the name of the game’ for the past several years.
Other factors leading into a rise in the price of oil are countries such as Venezuela not being ‘up to date’ in their production possibilities due to government strife. Venezuela has some of the best oil reserves in the world, similar to Saudi Arabia, but during the last decade or so, that South American country hasn’t kept up with maintenance and development of its oil fields and they’re in shambles.
Of course, there always is the possibility of quicker elevations in the price of crude in 2018 when you factor in major conflicts and other worldwide disruptions of supply due to natural or political problems of a major sense that can occur.
Another factor that can be considered and be disruptive is OPEC members and their supporting countries attempting to disrupt the emerged fracking results that have made the United States a major player in oil production. They know we have that edge and they have sort of accepted it but may at different times during 2018, attempt to slow down our oil production efforts. This would be done, all the while, realizing their need for United States support in any military conflict they may become involved in. Saudi Arabia has a developed friendship with our nation.
Various countries along with heavily populated China, and its demand, had a lot to do with the huge upswing in the price of oil. When China’s demand began to falter, that was significant in the eventual downswing in the price of oil.
Of course, other countries experienced slowing growth at the same time and that led to the lowering in the price of crude oil that began in 2014.
We don’t need $100 a barrel crude oil in the future. That just won’t work in the economies of our nation and other countries.
In Pleasanton and Atascosa County, due to Eagle Ford Shale development, there is a lot of oil field activity now and that can be seen in the ‘white truck’ (oil related) traffic and busy hotels, restaurants and other businesses in this area.
Pleasanton, by location alone, benefits from a good price in crude oil.
Certain things create this conclusion with three major roadways, Interstate 37, U.S Hwy. 281 and State Hwy. 97 in the Pleasanton area along with Union Pacific Railway.
Then you have the ever existent destinations of the Gulf Coast and lower Rio Grande area leading into Mexico where travelers will always go through this area.
An important project, Corpus Christi Liquefaction, LLC, subsidary of Cheniere Energy is scheduled to come online in 2019. This endeavor has already lined up customers abroad with at least 20-year contracts to buy the liquified gas that will be reverted back into natural gas again for their energy needs. Natural gas from the Eagle Ford Shale will be processed at this Cheniere facility.
Another factor that can aid in a further upswing in the price of crude oil is that Saudi Arabia and other OPEC affiliated countries decided recently to continue curbing production of crude oil throughout 2018.
Saudi Arabia was borrowing billions of dollars, beginning in 2016, to support its economy and that has led to initiatives to produce less oil with hopes of increasing the price of crude oil and that increase has been happening.
Drilling permits are soaring in Texas according to figures from the Railroad Commission of Texas where it showed 1,187 original drilling permits in November 2017 compared to 673 in November 2016.
According to Baker Hughes Inc., the Texas rig count as of December 8 was 459, representing about 49 percent of all active rigs in the United States.
Another plus is that Texas’ unemployment rate has fallen to 3.8 percent, setting a new record for the lowest unemployment rate recorded in four decades. The Texas economy added 54,500 seasonally adjusted nonfarm jobs in November. Annual employment growth for Texas increased to 2.7 percent in November, marking 91 consecutive months of annual growth.