Canadian Manufacturing

Long-term oil prices set to decline: Deloitte

Latest Canadian oil and gas forecast points to over-supply as part of the reason for price stagnation

CALGARY—Oil prices are headed downward and natural gas will remain flat through to 2022, according to Deloitte’s Canadian domestic oil and gas price forecast, released this week.

The forecast tracks futures trends for Henry Hub Gas, AECO Gas and WTI (West Texas Intermediate) from 2010 through to 2013.

It shows WTI oil at US$95 per bbl (barrell) for 2014, and predicts a slide to US$90 per bbl for 2015; leveling out at $85 per bbl by 2018.

“The moral of the story is that energy companies and investors need to plan with caution and factor in the long-term implications of their decisions,” said Andrew Botterill, senior manager of resource evaluation and advisory with Deloitte.

Natural gas prices will continue to be impacted by over-supply in North America, he added.

“The other interesting trend is the ever-decreasing value of natural gas during the last year of each dataset. The December 2013 futures price for natural gas is $6.04/ Mcf. That’s a far cry from the $8.50/ Mcf futures price listed three years ago.”

The Deloitte forecast shows natural gas at an Alberta AECO real price of $3.70/ Mcf (1,000 cubic feet) in 2014, rising to $3.85 per Mcf for 2015 and up to $5.70 per Mcf by 2024.

View the full report

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