Oil executives and industry insiders are patiently waiting for movement in the oil market in the coming months before continuing with further plans. With the price of oil per barrel dropping below $50 and drivers across the U.S. reaping the benefits of $2 a gallon gasoline, the future of the market remains clouded with hopes of a rebound in 2015.
According to USA Today, most experts agree that oil will bottom out and begin an upward swing in a matter of months, perhaps by the second quarter of the year. However, reaching $100 per barrel may be out of the question as global demand shifted in recent years and foreign producers are left with limited markets to supply to. As a result, an overabundance of oil and not enough customers has marked 2014 and the beginning 2015.
"Both U.S. and Canadian markets could be affected by the pending progress of the Keystone XL bill."
Many insiders believe the end of low-priced oil is approaching as drillers have difficulty profiting with such small margins and investors begin to put more money into energy stocks in hopes of future gains. Investors are timing the market, waiting for the right moment to buy up oil stocks to coincide with the coming rebound. And once this trend begins, others will likely do the same, leading to a paradigm shift in the market.
Not all companies equal
Producers that are better able to manage the current supply glut are larger firms with years of experience on both sides of the boom and bust cycle, according to Reuters. Though rig counts fell in recent months, hydraulic fracturing companies have still largely kept up their drilling paces, meaning efficiency per well remains high.
Additionally, drillers are hesitant about current prospects, but those looking for long-term contracts may be better poised to benefit from a surge in oil prices. And with natural gas consumption spiking during winter, companies utilizing fracking techniques in gas deposits have the potential to find new customers, according to FuelFix.
Both U.S. and Canadian markets could be affected by the pending progress of the Keystone XL bill, which recently cleared a major legislative hurdle, garnering 63 votes – breaking a filibuster stalemate and sitting just four votes short of overriding a presidential veto, according to The Hill.
With the House of Representatives passing similar legislation, Keystone success in the Senate could mean potential construction on the project – which would move resources more efficiently from Canada to the Gulf Coast – cutting down on transportation costs and allowing drilling companies to remain economically viable during low-price environments.
"Right now we've got about 63, but we're going to the floor with an open amendment process," said Sen. John Hoeven R-N.D., according to The Hill. "We're trying to foster more bipartisanship, getting the Senate to work the way it's supposed to work, so we can pass this measure and other measures and either override the veto or attach the bill to other legislation that will get 67 votes."
As governments around the world continue to deal with falling oil prices, drillers with long-term interests still have much to gain. And when oil rebounds later this year, a normal market will once again aid producers.
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