HOUSTON — Investment research group Morningstar said Tuesday that the oil glut and low prices are likely to last at least through next year.
“Declining U.S. oil production over the next several quarters will help reduce global oversupply, but in our opinion, that alone cannot quickly fix the current global imbalances, signaling an extended downturn that’s likely to last through at least 2016,” Morningstar analysts wrote in a note released Tuesday.
Near-term prices are likely to remain low, according to the note, which cited the recent decision by the Organization of Petroleum Exporting Countries to maintain production even as some of its smaller member states suffer from cheap crude.
The group’s conclusion mirrors the pessimistic outlooks at other analyst groups and many energy companies themselves.
On Tuesday, U.S. benchmark West Texas Intermediate crude oil traded up 84 cents to $37.65, down from near $100 per barrel in 2014. Benchmark natural gas prices, set at Louisiana’s Henry Hub, gained 11.3 cents to $2.341 as cold gripped much of the country following months of warm weather.
Those low prices, and the lack of support coming in 2016, are likely to continue to hurt both the stock prices and drilling budgets across the energy sector, Morningstar said.
Read the rest at FuelFix.com