CALGARY, ALBERTA -- (Marketwired) -- 07/02/13 -- NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES
Deloitte's Resource Evaluation & Advisory practice today released its quarterly Canadian domestic oil and gas forecast for June 30, 2013. In his forecast commentary, Andrew Botterill, Senior Manager, Resource Evaluation & Advisory, cautioned against placing too much emphasis on short-term price increases when the fundamentals of supply and demand in North America continue to point to long, slow growth for oil and gas prices.
"Certainly there have been short-term price increases during the second quarter of 2013," Mr. Botterill acknowledged. "But the laws of supply and demand prevent these from being anything other than temporary. The reality is that North American production has been increasing over the last five years, while demand for Canadian oil and gas has been essentially stagnant. As long as Canada is dependent on the U.S. as its primary export customer, and lacks the export capabilities to serve other markets, we are unlikely to see significant long-term price increases on which to base increased drilling initiatives."
While NYMEX Henry Hub gas traded as high as US$4.37 (C$3.85/McF AECO) in April, Mr. Botterill says the steady downward trend since then proves that the caution he has exhibited in recent forecasts is well founded. Deloitte's June 30, 2013 forecast continues to show natural gas at an Alberta AECO real price of C$3.35/Mcf in 2013, rising to $C3.70/McF for 2014 and up to C$5.20 by 2021. Deloitte's NYMEX real price is forecast at US$3.80/Mcf throughout 2013, rising to US$4.00/Mcf for 2014 and up to US$5.50 by 2021.
"We have seen differentials of $0.30/Mcf in early 2013 widening to more than $0.50/Mcf. This shows that any uptick in gas prices is quickly swallowed up by U.S. gas markets and not felt to the same extent in Canada," said Mr. Botterill. "The bright side is that, even though the 2020 futures price today is about 30 per cent lower than it was in 2008, we are still forecasting the same degree of growth over time. We're just starting from a lower short-term price brought on by the oversupply we've created with increased production since 2008."
With respect to oil, Deloitte's long-term outlook for WTI oil increases slightly to US$94/bbl for 2013, decreasing to US$91.00 for 2014 and eventually leveling out at US$85/bbl by 2017, consistent with long-term futures markets. Deloitte continues to forecast a $5/bbl differential between WTI and Edmonton par that will decrease to $2/bbl over the long term to match pipeline tariffs between the two markets.
For Deloitte's complete oil and gas price forecast dated June 30, 2013, visit www.ajmdeloitte.ca/price-forecasts.html.
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited. Deloitte operates in Quebec as Deloitte s.e.n.c.r.l., a Quebec limited liability partnership. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
On behalf of Deloitte
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