Good Times Bad Times - RBN's Outlook for Oil, Gas, and NGL Supply, Demand, And Prices

Six months on from the height of the crude oil price rout of April 2020 and the unprecedented market convulsions that followed, energy markets appear to be settling into a state of hyper-uncertainty amidst the ongoing pandemic. Crude oil prices have been downright equanimous, stabilizing near $40/bbl in recent months. Volatility has reigned in the gas market, but it has thus far managed to avoid a major collapse, and the NGLs market has dodged a complete derailment from norms, if barely. The relative calm provides the perfect opportunity to assess how COVID-era energy markets are operating and what lies ahead — which is what we’ll be doing next week at RBN’s Virtual School of Energy. There’s a new order taking shape, and we’re rolling out RBN’s freshly updated outlooks for U.S. crude oil, natural gas and NGL markets. As always, we’ll pull back the curtain on the fundamental analysis and models behind our forecasts, so you can understand how we arrived at our answers, and gain the skills and tools to adjust the assumptions as markets evolve. As you’ve gathered by now, today’s blog is an unabashed advertorial for our virtual conference, but read on if you’d like to hear more about the underlying premise behind our latest outlook.

The last time we held our School of Energy online was in April — pretty much in the middle of the COVID meltdown. As we were holding the April conference, market turbulence was hitting a crescendo.  Crude prices dropped below $20/bbl that week, propane prices were up by a dime a gallon, gas was bouncing up and down 5-10% each day, and the market was hard-pressed to know what would happen in the next five days, much less six months or a year. Demand was decimated by stay-at-home and other measures to combat COVID, the OPEC+ failure in early March remained unresolved, and crude oil storage was at risk of hitting capacity constraints. Within days of the conference, crude prices crashed to negative $37/bbl, before returning to positive territory — a stark reminder of the futility of forecasting flows and prices at the time.

In some ways, not much has changed since then; COVID is still with us, the toll in human lives has been horrendous, big pieces of the economy are still shut down, air travel is still comatose, and conferences are still virtual. The market has also since weathered a wipeout in LNG exports. What has changed, though, is that energy markets, like the rest of the world, have learned to adapt to life in a pandemic. So has RBN’s framework for understanding how energy markets are behaving.

Ever since the collapse of OPEC+ and COVID struck, the RBN team has been retooling our production, infrastructure, and supply/demand models to reflect the new world order. Now that the market has gotten a breather from the rapid-fire punches of early 2020 and is operating somewhat more rationally, it’s a good time to assess what the recovery will look like longer term, in the upcoming months and years. That is what our Fall Virtual School of Energy is all about. Before we get to the highlights of our findings, here’s a little bit about the format. While this will be our 14th School of Energy, it’s our third time going virtual, and what that means is that you’ll not only be able to attend the conference online in real time on October 20-21, asking questions as we go, but after the conference, all the materials will be available for replay, in whatever order you choose. So you can view the modules you want during the online sessions and go back to look at any other modules after the fact. That way, you can view the sessions that are of most interest to you RIGHT NOW! And it’s not too late to sign up. You can register, here.

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