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Global Credit Research - 04 Jan 2013
New York, January 04, 2013 -- Prices for crude oil will remain high in 2013, while for natural
gas they will slowly recover from historical lows over the next two years,
Moody's Investors Service says in its 2013 outlook for the oil and
gas sector. West Texas Intermediate (WTI) benchmark crude is expected
to continue to sell at a steep discount to Brent crude through the new
year, with the differential gradually declining thereafter.
"Ongoing US transportation bottlenecks will keep WTI prices at a
$15 per barrel discount to Brent prices, while increasing
Asian demand for Brent grades will keep prices high for that crude,"
says Steven Wood, Managing Director and author of "Oil Prices
Support Global Investment in 2013, But Demand Challenges Remain."
US oilfield services and drilling companies exposed to offshore and international
markets will do better than North American onshore companies in 2013.
For the former, heavy investment has brought on new production,
while the latter currently suffer from a surplus of service equipment
due to operational efficiencies and persistently low prices for natural
gas.
"Booming oil and natural gas production, as well as unconventional
plays such as shale activity, have created an urgent need for infrastructure
in North America," Wood says. "And though new
infrastructure will gradually bring more crude to US coasts, it
won't begin to narrow price differentials until 2014."
In the meantime exploration and production companies' continued
search for natural gas liquids will keep prices for natural gas under
pressure. Natural gas prices have become disconnected from oil
prices, Wood says, and while a sudden, game-changing
growth spurt in demand for natural gas is unlikely in the near term,
natural gas consumption will continue to increase in the US due to the
focus on clean energy, large domestic supplies and cheap prices
boosting demand.
In the downstream refining and marketing segment, margins will remain
under pressure this year as capacity additions outpace global growth in
demand for fuel.
Moody's research subscribers can access this report at http://www.moodys.com/research/Global-Oil-and-Natural-Gas-Industry-Oil-Prices-Support-Global--PBC_148596.
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Moody's: Oil prices to remain high in 2013; international investment remains strong
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