Posted on: 12. 31. 20
As the pandemic raged throughout the world in 2020, the oil and gas industry was one of the hardest hit industries. Production declined, consumer use hit major lows, and several production companies faced permanent closure and bankruptcies.
As dark as 2020 was for all of us, we like to look for the light at the end of the tunnel. Fortunately, predictions from industry knowledge house, Deloitte, and the U.S. Energy Information Administration (EIA) shows that at least in the short-term for 2021, things will begin to slowly look up.
Here’s a quick peek behind the curtain of the predictions we see coming in the New Year.
Shut-Downs Still Loom in the Distance
Although we are about to delve into the details of much needed increases in the oil and gas industry, the fact still stands, that the pandemic remains a debilitating situation that creates an air of uncertainty.
Over the last couple of months, even with the promise of a vaccine, the pandemic has actually evolved in other parts of the world. The winter increase in COVID cases brings about the threat of further shut-downs and restrictions. If these events do happen the demand of oil and gas can easily decrease and lead to even more problems with getting prices back to where they were before the pandemic.
Restrained Oil Production Could Cast a Shadow on Local Production
Geopolitical issues will always be something that impacts the oil and gas industry, and complications in 2021 will be no different. While our local industry will try its best to increase oil prices and therefore production throughout the world, the recent OPEC decision to reduce planned production increases could hamper efforts. As global inventory pushes into a surplus, even higher demand won’t make a huge impact on prices simply because there is so much global product available.
World Consumption of Crude Oil Will Improve in 2021
Although the world consumption numbers for liquid oil declined from 2019 to 2020, experts predict that even with restrained production, consumption will increase during the first quarter of 2021.
According to the EIA, its predictions for oil consumption in 2021 is this:
“EIA forecasts that global consumption of petroleum and liquid fuels will average 92.4 million b/d for all of 2020.”
This reduces consumption but over 8 million barrels per day from this time in 2019. However, the big prediction from the EIA is that in 2021, our industry will see a 5.8 million barrels per day increase as people begin to get vaccinated and travel outside of their current boundaries.
Natural Gas Prices Will Begin to Increase Early 2021
Although the predicted increase of natural gas prices is slight, experts predict that there will be a monthly increase amongst global consumers. According to the EIA, it’s estimated that monthly average spot prices for natural gas will be $3.01/MMbtu. 2020 saw an average of $2.07/MMbtu, so while the increase seems small, it’s definitely a step up in the right direction for facilities across our industry.
Prepare for Increased Production Needs with Pro-Gas, LLC
As we all gear up for 2021, it’s going to be important for production facilities to begin stocking up on oil and gas equipment that will help their sites make predictions a reality.
Pro-Gas, LLC provides essential equipment that ranges from our revolutionary Fuel Genie to portable LNG storage containers. No matter your site’s needs, our team can help! Contact us to learn more about our current product availability.
