Market Rebalance Underway After Painful Shock to the System

Six months into commodity price wars, a global pandemic, and dramatic impact to supply and demand, Enverus is cautiously optimistic about a return to normalcy for oil & gas markets

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Enverus

Jul 08, 2020, 10:43 ET

AUSTIN, Texas, July 8, 2020 /PRNewswire/ -- Enverus, the leading oil & gas SaaS and data analytics company, has released its latest FundamentalEdge report, Don't Call It a Comeback, that explores the company's current, cautiously optimistic view of the oil, natural gas, and NGL markets and where they are headed over the next five years.

Six months into a pandemic that brought the global economy to its knees, green shoots have begun to appear, reads the crude oil overview in Enverus' latest report. In April, more than half of the world's population was in lockdown. Today, that estimate is closer to 25%. Indicators of traffic congestion in major urban centers around the world also show signs of a partial recovery in personal mobility and economic activity—the key drivers of global oil demand.

In addition to supply and demand recovery for crude oil, Enverus' report also covers impacts to natural gas prices. While natural gas demand losses due to COVID-19 were higher than production declines, upcoming peak demand for winter is expected to produce an impressive bump for the price of natural gas. With prices averaging under $2/MMBtu in 2020, Enverus could see prices increasing above $3.50/MMBtu as soon as winter 2020-2021, with the most production growth coming from the Marcellus/Utica, Haynesville, and Permian Basins.

"We're cautiously optimistic, but not ready to label this a comeback," said Bernadette Johnson, vice president of Strategy and Analytics at Enverus. "We anticipate some operators to carry that same theme, too. A lot of the pain should be behind them now. Capex has been cut, costs were lowered in both development and production, and hedges provided parachutes. Demand is on the uptick—for now at least."

Visit enverus.com/managing-the-energy-market to stay informed of the latest market conditions.

About Enverus
Through its SaaS platform, Enverus is the leading data, software and insights company providing innovative technologies and predictive/prescriptive analytics, empowering customers to navigate the future. Enverus' solutions deliver value to more than 6,000 customers in 50 countries across the upstream, midstream and downstream sectors, enabling the industry to be more collaborative, efficient and competitive. Enverus is a portfolio company of Genstar Capital. Creating the future of energy together. Learn more at www.enverus.com.

SOURCE Enverus