After enduring 2015-16 it is about time for some good news, right? And that’s just what 2017 is shaping up to be—a relatively good news year for energy markets. But don’t go crazy with this. The key word in that sentence is “relatively’” —which means better than 2015-16, but if you are looking for that other “R” word (“recovery”) you won’t see it here. Crude prices will be up some, but nothing like the first few years of this decade. Natural gas and NGL prices will be stronger too. But both may have to wait still another year before seeing a real upswing in 2018. Nevertheless, 2017 is looking good for most of the energy market. Not for everyone, mind you. Many will struggle because their assets are in the wrong places, they are at the wrong end of the food chain, or they were simply unprepared for this new market reality. How will you know the difference between the winners and losers? Well of course, by looking deeply into the RBN crystal ball to see what 2017—Year of the Rooster—has in store for us. Cock-a-doodle-do!
We have a long-standing RBN tradition with this annual Prognostications blog, and unlike many forecasters, we also look back to see how we did with our forecasts the previous year. Usually we do the look-back and the Prognostications in the same blog, but there is a lot that will be coming at us in 2017. So this time around we split the blog into two pieces. Yesterday’s blog, titled The Top 10 RBN Energy Prognostications—2016 Scorecard, was the look back. We feel our predictions were pretty accurate, with the first half of the year a bit tougher than we expected, and the end of the year a bit better. Overall, though, we saw modest improvement in prices, somewhat higher rig counts that we would have expected at these prices, and easier access to capital than we would have thought these prices would justify. That is a good setup for the 2017 Prognostications that we will explore below.
And Now 2017
According to the Chinese calendar, 2015 was “Year of The Goat” and that year certainly lived up to its name. The Goat was followed in 2016 by “Year of the Monkey”, another pretty good description of energy markets during the year. So how should we think about 2017, “Year of the Rooster?” Well, according to some of the Chinese astrology websites, the Year of the Rooster can be lucrative, if you try real hard. And that sounds like a pretty good assessment for the market environment we see in the year ahead. Definitely on the upswing compared to 2015 and 2016, but the opportunities will only present themselves to the hard-working and well-prepared.
