A Look at the EIA’s Oil and Gas Sector Outlook for 2021

The year 2020 saw a steep decline in the demand of energy in various sectors, such as residential, commercial, transportation, and industrial. The downturn has been largely due to the COVID-19 pandemic, which has created a situation unlike any other low point in previous economic cycles. With the vaccination campaign well on its way across the world and life quickly returning to normal, all indications point to resurgence in consumption of petroleum. This is great news for qualified investors looking for direct energy investment opportunities. Let’s take a closer look at the oil and gas investments outlook for 2021.

The continued production cuts by OPEC+ are occurring against the backdrop of rising oil demand globally. The decline in production was recently made worse by well freeze-offs in Texas as a result of extremely cold weather. This has resulted in continued global oil inventory draws, a situation that is set to prevail, at least in the short-term, as OPEC+ announced at the close of its March 4 meeting that the production cuts will continue through April. This move will sustain oil prices and, as production increases gradually from May through June, some downward pressure is expected with the increased balance in the oil market. From averaging $67/b in March and April, Brent crude oil prices are forecast to fall to $65/b in May settling at $58/b, which is significantly higher than 2020 prices.

After the production cuts, weather disruptions, and global oil inventory draws that have characterised the first half of 2021, the oil markets are expected to balance out. US production is expected to rise in the second half of 2021 going into 2022. This, coupled with increased OPEC+ production and OPEC’s high spare production capacity all point to more balanced oil markets and reduced downward pressure on Brent crude prices during the same period.

There are a few uncertainties in respect of EIA’s forecast of increased oil availability and downward oil price pressure. This is because the demand side is largely dependent on vaccination rates and the speed at which the transport and employment conditions are restored to pre-COVID levels. The supply side, on the other hand, depends on the degree to which OPEC+ production cuts subsist after the April extension. Another element of uncertainty is the response that higher oil prices are going to elicit from US tight oil production.

There is increasingly less uncertainty in 2021 when compared to 2020 during the same period. Qualified investors should take this time to explore available energy investment opportunities. Main Oak Capital gives you easy access to potentially lucrative oil and gas investment opportunities if you are looking to invest in the energy sector. Talk to a specialist and get all the information about available energy investment opportunities. Call (972) 544-1645 or email info@mainoakcapital.com to discuss how we can help you attain your investment objectives. You can also fill out our contact form, and we will get back to you soon as possible.