For the most part, 2019 forecasts for the oil and gas industry are looking good. However, there are few key factors that will require some strategic adaptations in order to maintain higher levels of profitability as we move into the next fiscal year.
EIA Projects Gains Across the Industry.
According to the Energy Information Administration, overall projections are increasing since they were last analyzed at the end of Q3 2018. The EIA is now predicting an increase of around 300,000 b/d than it previously reported for 2019. This comes on the heels of greater production in areas like Texas and North Dakota, but also on recent developments with Iran. Namely, since America left the Joint Comprehensive Plan of Action, and other countries have drastically reduced their imports from Iran, there will be more responsibility placed on other OPEC nations and Russia to adjust their supplies.
One thing that could affect this projection is how much Iranian crude oil actually makes it to market and the other OPEC nations’ responses.Despite this, production and demand look to remain on par with 2018.
In terms of natural gas, the EIA also predicts a continued positive outlook. Again, more production than anticipated is a large factor in these projections.
Challenges to Oil and Gas in 2019
As mentioned above, the actual amount of Iranian crude oil that enters the market and how other nations react to it will have some impact on the overall stability of the international market. However, there are a few other factors that may impact the market. PwC notes that while the industry has seen a production in surplus in recent years, a supply crunch may hit in 2019.
It may seem hard to believe, given the overall success the industry has experienced in recent years, but this very same supply surplus could lead to future volatility especially as more and more nations begin moving away from the fossil fuel sector. The responsibility of financial discipline will fall to the producers. Increased productivity, efficiency and embracing the newest technologies may be the best ways to maintain profitability in 2019.
Prepare for 2019 with Tiger General
No matter where the market turns in 2019. Ensure your operation is ready for the new year with equipment from Tiger General. Browse our inventory, or contact us today with any questions.