However, capital may move away from unconventional
plays with the possible freeing up of Mexico’s energy sector
while additional factors such as US LNG export approvals,
East African LNG development, and the end of the Gazprom
monopoly for Russian gas exports play important roles as well.
Oil, gas, product prices
Non-OPEC oil production drove up supply, reducing oil
prices in fourth-quarter 2013 even as instability in Libya and
Iraq limited some supplies. With the prospect of a rise in oil
exports from Iran due to the easing of sanctions, OPEC may
compensate in 2014 by limiting production.
A ban on exports in the US has given rise to further price
distortions, which had been alleviated by the massive infrastructure build-out.
“We can expect to see the distortions continue in the
short term, but we also believe that policymakers will address the export ban in the near future,” said Marcela Dona-dio, oil and gas leader, E&Y Americas.
Byers said, “On the oil side, given the expected capacity
growth in OPEC and the continuing growth of non-OPEC
output, we’re probably looking at some downward pressures
on oil prices. But on the gas side, we see the market coming
into more balance, offering prospects for some upward pres-
sure on gas prices.”
E&Y said gas storage levels were below normal for the
first time in years due to an early cold winter, as prices
reached near $4.50/MMbtu. Higher prices are expected to
encourage further production, but slow the power sector’s
transition from coal to gas.
As crude prices eased so did product prices, causing a
slight decrease in refiner margins in the fourth quarter, although margins remained historically high. Notional cracking margins on a the New York Mercantile Exchange 3-2-1
basis averaged about $15/bbl in the fourth quarter and about
$23/bbl for the year, down from an average of about $30/bbl
in 2012, E&Y said.
As previously reported by PwC, oil and gas merger and ac-
quisition activity in 2013 declined in the US (OGJ Online,
Jan. 28, 2014), with Canada showing the same trend. Trans-
action value fell 37% in the US and 63% in Canada as deal
volumes dropped 21% in the US and 32% in Canada.
“Transactions and divestments of oil companies show a
trend to sell off downstream operations and focus on poten-
tially more lucrative upstream plays,” said Jon McCarter, oil
At Merchants, we strive to provide fleet management solutions that go above and beyond your expectations.
Backed by a full breadth of services, we are standing by to help you take your fleet as far as it will go.
TUNE IN TO THE FLEETCAST PODCAST!