5 Oil And Gas Predictions For 2021 | OilPrice.com


Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!


Home Oil Prices Rig Count Energy Energy-General Oil Prices Crude Oil Heating Oil Gas Prices Natural Gas Coal Company News Interviews Alternative Energy Nuclear Power Solar Energy Hydroelectric Renewable Energy Geothermal Energy Wind Power Fuel Cells Tidal Energy Biofuels Environment Global Warming Oil Spills Geopolitics Africa Asia Europe Indonesia International Middle East North America South America Video Breaking News Premium Articles Community Trade Now My Account Latest Discussions Energy General Oil Stocks & Prices Other Energy Topics Trade Now Get Exclusive Intel All Prices OPEC Blends Canadian Blends U.S. Blends WTI Crude 10 mins Sell Buy 64.43 -0.37 -0.57% Brent Crude 10 mins Sell Buy 67.93 -0.46 -0.67% Natural Gas 10 mins 2.535 -0.027 -1.05% Mars US 12 hours 65.10 -0.74 -1.12% Opec Basket 2 days 68.18 +0.04 +0.06% Gasoline 10 mins 2.072 -0.029 -1.39% Louisiana Light 2 days 67.66 -0.18 -0.27% Louisiana Light 2 days 67.66 -0.18 -0.27% Bonny Light 1 day 66.90 -0.61 -0.90% Mexican Basket 2 days 64.02 -0.25 -0.39% Natural Gas 10 mins 2.535 -0.027 -1.05% Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Marine 1 day 66.38 -1.67 -2.45% Murban 1 day 67.25 -1.61 -2.34% Iran Heavy 1 day 63.18 -2.33 -3.56% Basra Light 1 day 68.23 -0.59 -0.86% Saharan Blend 1 day 66.59 -0.65 -0.97% Bonny Light 1 day 66.90 -0.61 -0.90% Bonny Light 1 day 66.90 -0.61 -0.90% Girassol 1 day 67.34 -0.59 -0.87% Opec Basket 2 days 68.18 +0.04 +0.06% OPEC Members Monthly Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Canadian Crude Index 1 day 54.20 -0.32 -0.59% Western Canadian Select 8 hours 53.60 -0.59 -1.09% Canadian Condensate 8 hours 63.80 -0.59 -0.92% Premium Synthetic 8 hours 65.20 -0.59 -0.90% Sweet Crude 8 hours 62.15 -0.59 -0.94% Peace Sour 8 hours 60.75 -0.59 -0.96% Peace Sour 8 hours 60.75 -0.59 -0.96% Light Sour Blend 8 hours 61.55 -0.59 -0.95% Syncrude Sweet Premium 8 hours 66.90 -0.59 -0.87% Central Alberta 8 hours 61.05 -0.59 -0.96% Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Louisiana Light 2 days 67.66 -0.18 -0.27% Domestic Swt. @ Cushing 1 day 61.50 -0.50 -0.81% Giddings 1 day 55.25 -0.50 -0.90% ANS West Coast 5 days 68.70 -0.27 -0.39% West Texas Sour 1 day 58.75 -0.59 -0.99% Eagle Ford 1 day 62.70 -0.59 -0.93% Eagle Ford 1 day 62.70 -0.59 -0.93% Oklahoma Sweet 1 day 61.50 -0.50 -0.81% Kansas Common 2 days 55.75 +0.00 +0.00% Buena Vista 2 days 71.78 -0.22 -0.31% Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

Click Here for 150+ Global Oil Prices

1D 1M 3M 1Y All Charts Discussion Headlines 16 hours API Surprises Analysts With Unexpected Crude Draw 19 hours U.S Import Prices Jump As Oil And Other Commodities Rally 20 hours Four New Natural Gas Pipelines Come Online In The U.S. 21 hours Lithium Prices Have Soared 88% This Year 22 hours The World Needs $131 Trillion In Clean Energy Investment By 2050 23 hours UK Faces Decline In Oil Production 24 hours Tesla Crash Prompts More Safety Investigations 2 days U.S. Braces For Expensive Gasoline This Summer 2 days U.S. Overtakes Saudi Arabia As India’s No.2 Crude Oil Supplier 2 days U.S. LNG Exports To Asia Surged By 67% In 2020 2 days UAE Claims Ownership Of Oil Cargo U.S. Just Seized 2 days NTSB: Tesla Uses Customers As Guinea Pigs For Autopilot Tech 3 days Record High Fuel Prices Hurt India’s Oil Demand 4 days Colombia Will Back Its Coal Industry For Decades To Come 5 days Tesla Looks To Develop EV Charging Infrastructure In India 5 days Oil Exploration To Hit Record High In Guyana 5 days China’s Steel Industry Has Been Hit Hard By Its ‘War On Pollution’ 5 days Saudi-Led Coalition Carries Out 32 Airstrikes Against Houthi Rebels 5 days Europe Can’t Keep Up With Demand For Battery Metals 5 days California County Sued Over A Potential 43,000 New Oil Wells 5 days Texas Strikes Back At The Anti-Fossil Fuel Lobby 5 days Colorado Braces For The Worst Winter Storm In 135 Years 5 days Israel Strikes Iranian Oil Tankers Bound For Syria 6 days Battery Giant LG Chem To Invest $4.5 Billion In U.S. Expansion 6 days U.S. Needs To Cut Emissions By 57% To Meet Paris Agreement Goals 6 days Mexico Energy Reform Sparks Wave Of Lawsuits 6 days Gold Erases Gains On Rebounding Treasury Yields 6 days Coal India Approves $6.4 Billion In New Coal Projects Despite Green Push 6 days Budget Airlines: European Clean Fuel Quotas Are Unfair 6 days Two Major Institutions Team Up To Boost Renewables In Latin America 7 days Saudi Oil Exports Holding Strong Despite Production Cut Commitment 7 days Saudis Vow To Protect Oil Facilities And Global Supply After Latest Attacks 7 days Qatar Exports First Oil To Arab Gulf Neighbor Since Rift Ended 7 days Libya’s Oil Production Could Stabilize Under New Unity Government 7 days Biden Shocks Environmentalists, Supports Gas Pipeline In Supreme Court Case 7 days Rosneft Set To Sell Assets To Focus On Flagship Vostok Oil Project 7 days Brent-Priced Oil Flows To Asia Set To Slump 7 days Oil Trader Mercuria Gets Painted Bricks, Not Copper In $36 Million Scam 8 days Oil Prices Slide On Yet Another Surprise Inventory Build 8 days U.S. Oil Production Saw The Largest Decline Ever In 2020 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen. 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea 11 minutes United States LNG Exports Reach Third Place 15 minutes Joe Biden's Presidency 6 hours Hilarious: New Mexico seeking exemption from Biden oil and gas leasing pause - governor 16 hours U.S. Presidential Elections Status - Electoral Votes 7 hours Geothermal energy using oil/gas drilling techniques 5 days Tesla Is Plugging a Secret Mega-Battery Into the Texas Grid 3 days IS SAUDI ARABIA SENDING A MESSAGE TO BIDEN 5 days Wyoming Lawmakers try new ways to block coal plant closures 10 hours America Makes Plans to Produce Needed Rare Earth Minerals Domestically 5 days Abandoned Wind Farm in the Oklahoma Panhandle: Revisited 2021 4 days Why is Bitcoin suddenly plunging? 4 days Good Marriage And Bad Divorce: Germany's Merkel Wants Britain and EU To Divorce On Good Terms 5 days ‘We Have More Leverage in the Free World Than We Think’ Against Chinese Regime

Breaking News:

API Surprises Analysts With Unexpected Crude Draw

Find us on:

Volkswagen Shares Soar As It Declares War On Tesla

Volkswagen shares exploded on Tuesday

Can Carbon Capture Make Clean Oil Production A Reality?

Governments, oil majors, and eccentric

How Biden’s Tax Hike Affects Oil

The Biden administration is set

Home Energy Energy-General

Robert Rapier

More Info


Facebook Twitter Linkedin Reddit

Premium Content

5 Oil And Gas Predictions For 2021

By Robert Rapier - Jan 27, 2021, 2:00 PM CST Join Our Community

When I made my 2020 predictions a year ago, the world was on the cusp of a pandemic that would upend the oil markets. In the process, it upended two of my energy sector predictions, but three others ended up being correct . The Covid-19 pandemic last year was a black swan event that caused an unprecedented fallout across the energy sector. The evolution of the pandemic this year will be the largest variable impacting the energy sector. Yes, larger even than any policies our new President will enact.

The energy sector is already off to a fast start in the equity markets this year, as the market is anticipating a return to normal. But if those expectations falter and it takes longer than expected to get the pandemic under control this year, there is a risk of a significant pullback.

Against that backdrop, below are my predictions for some of the significant energy trends I expect this year. As I usually point out, the discussion behind the predictions is more important than the predictions themselves. That’s why I provide extensive background and reasoning behind the predictions.

I also make predictions that are specific and measurable. At year’s end, there are specific metrics that will indicate whether a prediction was right or wrong.

1. The average price of WTI in 2021 will be between $50/bbl and $55/bbl.

Oil is still the world’s most important commodity, so I always try to lead off with a prediction on the direction of oil prices. I generally make this prediction by looking at supply and demand trends, as well as inventory levels.

A year ago, I thought my prediction was aggressive, but sound. I felt like oil prices would be strong all year. But this was one prediction the pandemic upended within a month of making it.

Because we don’t know how long it’s going to take to get the pandemic really under control, there’s a lot of uncertainty around the direction of oil prices. Oil prices rallied in the fourth quarter, and are now close to where they were a year ago. That anticipates a strong recovery. However, OPEC is sitting on spare production capacity that they can bring online if demand starts to rise. That will provide some headwinds for oil prices.

Related: Oil Majors Are Eyeing A Suriname Offshore Boom In 2020, the average daily price for West Texas Intermediate (WTI) was $39.16 per barrel (bbl). That was nearly $20/bbl lower than in 2019. This year, I think it’s almost certain that WTI will average higher than it did last year, but I think it’s doubtful that it averages as much as it did in 2019.

The spot price of WTI is presently $53.00/bbl. Demand is still trending lower than it was a year ago, and that presents some risk of prices falling further. OPEC will likely be a cap on the high side. Thus, I predict that the average annual price for WTI in 2021 will be between $50/bbl and $55/bbl.

However, I will add a couple of caveats. If one of the new variants of Covid-19 isn’t covered by the available vaccines or if it takes longer than expected to get the pandemic under control, oil prices will break back below $50. But if the pandemic is brought under control quickly, we could see a strong recovery in oil prices that could break above $55. Demand in the U.S. is weaker than it was a year ago, but that isn’t the case for all countries. OPEC is still ready to ramp up production, but it is possible that prices may get ahead of OPEC action.

2. Total U.S. oil production will decline for the second straight year.

According to the Energy Information Administration (EIA), U.S. oil production plummeted in the second half of 2020. At present, year-over-year production is 2.0 million BPD lower than it was a year ago. The number of rigs drilling for oil has risen in recent weeks, but it is still down 57% from a year ago.

President Biden has already suspended new oil and gas leasing and drilling permits on U.S. lands and waters for 60 days. He has also canceled the permit for the Keystone XL pipeline, signaling that this administration will not be friendly to the oil industry.

All of this points to the likelihood that U.S. oil production will continue the decline it began in late 2020. I expect the decline to slow, and perhaps stabilize, but it would take a strong reversal to see U.S. oil production grow in 2021.

3. The average natural gas price will be at least 25% higher than it was in 2020.

Last year I predicted that natural gas prices would average the lowest level in more than 20 years. That did in fact happen. The average Henry Hub natural gas spot price for 2020 was $2.03/MMBtu, which was the lowest annual average since the EIA began tracking that data in 1997.

Related: Barclays: WTI To Average $52 In 2021

But falling oil production means a decline in natural gas supplies that are associated with that oil production. That tightens up supplies, which was a factor in the subsequent recovery of natural gas prices in late 2020.

I predict that recovery will continue into 2021. I expect natural gas prices to average above $2.50/MMBtu in 2021, which would represent a ~25% or more increase above 2020.

4. U.S. oil imports will increase in 2021.

U.S. oil imports have steadily declined since 2005 when they averaged 10.1 million BPD. There was a brief reversal in 2016 and 2017 a consequence of lower prices that negatively impacted U.S. oil production. But by the end of 2020, crude oil imports had fallen to 6.0 million BPD.

I expect this trend to reverse in 2021. A combination of last year’s price collapse and new regulations from the Biden Administration will likely drive U.S. oil production lower this year, but overall oil demand is going to recover. That means more imports will be called upon to fill the void.

5. ConocoPhillips will have a total return of at least 30%.

I generally like to close with a prediction on ConocoPhillips, which is the world’s largest publicly traded, pure oil and gas producer. Last year I predicted it would return 20% on the year. The company was positioned to have a good year before the pandemic caused oil demand to collapse. So instead, ConocoPhillips closed the year down nearly 40%.

As I write this, the year-over-year WTI price is 8.7% lower. But shares of ConocoPhillips are still 32% lower than they were a year ago. The company is positioned to cover dividends and capital expenditures with WTI at $40/bbl. At $50/bbl, the company should do quite well.

Barring another collapse in oil prices this year, I expect the market to eventually acknowledge the value proposition. As I said a year ago, even if oil prices collapse I expect ConocoPhillips to weather the storm. They have been around for a long time, and are one of the best-managed oil companies on the planet. The company also has significant exposure to natural gas, so higher prices there will be more icing on the cake.

There you have my 2021 energy sector predictions. As always, I will grade them at the end of the year.

By Robert Rapier via rrapier.com

More Top Reads From Oilprice.com:

Was Saudi Arabia's Surprise Production Cut A Good Idea?
Goldman Bullish On Oil As It Eyes Major Relief Package
Can Shale Resist The Lure Of Another Output Surge?
Download The Free Oilprice App Today

Back to homepage


Previous Post

The Global Car Industry Is Finally Set To Rebound

Next Post

The World’s Biggest Oil Firms Face Rating Downgrades

Robert Rapier

More Info

Related posts

IEA: Oil Demand Will Not Return To Pre-Crisis Levels Until 2023

Biden’s Energy Agenda To Reduce Oil Production And Boost Prices

How Biden’s Tax Hike Affects Oil

Leave a comment

Most Popular

Mexico’s Pemex Boasts Billion-Barrel Oil Discovery

Why Gasoline Prices Will Continue To Rise

Biden’s Energy Agenda To Reduce Oil Production And Boost Prices

China Ramps Up Oil Imports From Iran

Nigeria’s Lawsuits Against Shell Could Cause Oil Major Exodus

Trending Discussions

More About Us About Us Site News Sitemap Advertise with us Site info Terms & Conditions Disclaimer Privacy Policy Contact Us

© OilPrice.com

The materials provided on this Web site are for informational and educational purposes only and are not intended to provide tax, legal, or investment advice.

Nothing contained on the Web site shall be considered a recommendation, solicitation, or offer to buy or sell a security to any person in any jurisdiction.

Trading and investing carries a high risk of losing money rapidly due to leverage. Individuals should consider whether they can afford the risks associated to trading.

74-89% of retail investor accounts lose money. Any trading and execution of orders mentioned on this website is carried out by and through OPCMarkets.

Merchant of Record: A Media Solutions trading as Oilprice.com