Texas Oil Regulator Expects $60/barrel Crude by 2017
A Texas oil industry regulator expects crude oil prices to eclipse $60 per barrel by next year as global supply and demand balance, a price that would again make production profitable across the largest producing U.S. state.
Any rise in oil prices would be a welcome relief to Texas energy companies, especially those who operate in the Eagle Ford shale region, where production has slumped with prices slumped near $43 per barrel.
"Pretty much every single fundamental that we have points to those commodity prices going up, not down," Ryan Sitton, one of three elected members of the Texas Railroad Commission, said in an interview on Monday.
"I fully expect to see $60 a barrel oil, and then some, next year," said Sitton, who will be a keynote speaker at the NAPE conference in Houston later this week, a gathering of oil and gas investors.
In Texas alone, Sitton said, state regulators are processing less than a third of the oil and gas well permits they did just two years ago, highlighting the wariness companies have to drill and pump more.
The inaction mirrors North Dakota and other large oil producing parts of the United States, where production has slipped from recent highs.
But that hesitancy has affected supply, with the United States pumping roughly 800,000 barrels per day less than its peak earlier this decade. Several OPEC members also have curtailed output.
"We are now fairly close, if not fairly even, on supply and demand," Sitton said.
Not all oil market observers agree with Sitton.
Investors don't expect prices to climb above $53 at all for the rest of the decade, and most shale oil producers in the United States have begun planning for what they are calling a "lower for longer" price schema. <0#CLCAL:>
Last week, the U.S. Energy Information Administration reported a jump in crude stocks, surprising markets which had anticipated a drop, pushing oil prices lower.
The EIA releases its latest survey on Wednesday, the day Sitton delivers his speech to oil investors. A Reuters poll shows that a drop in crude stocks is forecast.
Sitton said he has instructed his office to expect more drilling permits.
"You'll see the big resource plays in the state of Texas start to look really attractive again at $60 a barrel oil," he said.
(Reporting by Ernest Scheyder; editing by Grant McCool)
(Reporting by Ernest Scheyder; editing by Grant McCool)
