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What does the Future of the Oil and Gas Industry look like in 2019?

The oil and gas industry faced many ups and downs in 2018. Brent crude oil prices started out at approximately $66 per barrel, spiked to $86, then finished the year at roughly $54 per barrel. WTI crude oil exhibited a similar pattern, starting 2018 at around $60 per barrel, increasing, then finishing at a yearly low.

Natural gas began the year at $3.87 per MMBtu, slightly dropped, and did not exceed an average of $3.00 per MMBtu until October, when it reached an average of $3.28 per MMBtu. In November and December, natural gas reached nearly $5.00 per MMBtu for the first time in four years, then ended the year around where it started, at $3.25 per MMBtu.

Several milestones were reached in 2018 for the U.S. oil and gas industry, including uncovering the biggest natural gas/oil reserve of all time, the U.S. becoming the world’s largest oil producer, as well as becoming a net oil exporter again. Other market changes, like former EPA administrator Scott Pruitt resigning, also played a role in 2018’s oil and gas industry outcome. After he resigned, controlled sales periods for E15 fuel ended. But what can we expect for the oil and gas industry in 2019?

Crude Oil Prices 2018

Predicting the future of the oil and gas industry is more than just calculating supply and demand. Geopolitical factors, global and regional economics, and even weather needs to be considered in the calculation. It’s safe to assume that this will be another year of ups and downs, and here’s why:

Gulf Forecast

As of February 8, 2019, the Baker Hughes rig count shows 1,049 active rigs in North America, which is up 74 from last year. However, several market analysts are expecting a decrease in drilling for the first half of this year. So far, the low prices have only slightly affected the rig count, but these numbers are predicted to drop even further in the second quarter.

These prices will influence the industry as a whole. Being that the Gulf region experienced lower prices last year, drilling companies in this area will need to make decisions quickly and monitor the market closer than ever.

Pricing Forecast

OPIS believes that 2019 is going to be transitional for several reasons, with the US-China trade war likely impacting the industry. Because of high production rates and large inventories already on hand, prices in the gulf are predicted to stay low for the majority of 2019. Another reason why this year is expected to be transitional is because of the changed 2020 IMO regulations.

Basically, the IMO has ruled that shipping vessels  using 5,000 – 35,000 parts per million of sulfur are no longer permitted to run at this level. Because of this, a low sulfur fuel boom can be expected towards the end of the year, and this fuel will be very pricey.

These new rules will affect more than just the industry–they will affect global pricing as well as anything shipped by boat. Whether it be South American vegetables and fruits, Chinese goods, or Japanese manufactured parts–all of these will experience a change in price because of these new IMO regulations.

Regardless of the effect this year will have on the industry, Mark Tool is here to help. Contact us today about your urethane, rubber, or splash zone protection needs for the upcoming year.

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