Here are some analyst market predictions for the Texas Oil and Gas market in 2018.
Texas accounts for 54 percent of all oil and gas employment in the U.S., and the economic health of every region of the state is impacted by the rise and fall of drilling operations. In 2017, the Texas energy sector registered rebounding growth and added 30,000 jobs. In 2018, if oil prices remain in the range of $45 to $60 per barrel, experts indicate that Texas is likely to enjoy continued broad-based growth across all regions and industry sectors. Here are some energy industry experts’ market predictions for 2018:
Energy market may stabilize
Saudi Arabia and Russia have pledged to stabilize the energy market to preserve oil revenues. On November 30, 2017, OPEC members extended production cuts through the end of 2018, sending a signal that the rebalancing of the oil market could speed up. If the production cuts remain in place, 2018 will see a continuation of the supply tightening that has been underway for the past six months. Between declining U.S. crude inventories, worldwide growth in demand and OPEC production cuts, there is less danger of a price crash.
Global oil consumption will rise
According to the International Energy Agency, oil consumption will hit record levels in 2018. The IEA predicts that global crude consumption will top 100 million barrels per day for the first time in 2018. Of that amount, almost one third goes to the Asian-Pacific and Americas regions.
Shale output will increase
The Permian Basin has seen the most growth in production. Most of the US production growth through 2018 is expected to come from the formations in the Permian Basin region of Texas and is expected to produce 2.9 million barrels per day by the end of 2018. This will represent almost 30% of total US production in 2018. Because of more efficient techniques and technology, shale oil has proven to be more resilient in a low-price market.
Less U.S. dependency on foreign oil
Increased shale production in the Permian basin reduces the U.S. need for foreign oil, and Texas producers are predicted to recover a record volume of crude oil over the next twelve months. In 2017, the U.S exported more hydrocarbons than ever before. The U.S. Energy Information Administration expects domestic output to reach an all-time high of 10.1 million barrels per day by December 2018.
Although the entire state of Texas is impacted by the ups and downs of the energy industry, two regions in particular experience the most drastic effects. Nearly one-third of Houston’s economy is dependent on energy. The revenue that energy workers spend on real estate, automobiles and retail are significant. Analysts say if crude prices stay around $55 a barrel in 2018, then the Houston area could add around 45,500 jobs but if crude prices approach $60 a barrel, Houston could add nearly 70,000 jobs in 2018. The Midland-Odessa metro area serves as the administrative hub and headquarters for oil production activities in the basin. As one of the nation’s most prolific oil-producing areas, any increases or decreases in drilling are felt immediately. Although the area has not fully recovered all jobs lost during the crash, the Midland-Odessa economy has seen consistent month-over-month increases in employment. Projected increases in shale output should positively impact the region in 2018.