Press releases

Increased North American oil production renews market volatility

Only minimal growth in oil and gas prices expected for next few years despite OPEC cuts

CALGARY, ALBERTA (July 5, 2017) – Oil prices are not expected to increase significantly any time soon as higher production in the United States and Canada has largely offset cuts made by the Organization of Petroleum Exporting Countries (OPEC), according to the latest oil and gas price forecast by Deloitte’s Resource Evaluation and Advisory (REA) group. The Deloitte forecast also says natural gas prices are likely to remain stable, with North American supply and demand relatively unchanged and storage levels above the five-year average.

“While OPEC production cuts helped to stabilize the market over the past six months, the considerable increase in North American production since this time last year is now putting downward pressure on oil prices,” says Andrew Botterill, Partner, REA group. “Inventories of oil in the United States peaked in March and remain well above the five-year average, so we expect only minimal growth in oil prices for the next few years.”

Botterill says the OPEC cuts, which removed about 1.8 million barrels a day from the market, helped to keep oil prices at around US$50 per barrel for most of the last quarter, but prices then dropped to a six-month low in June, in part because of reports of increased gasoline stockpiles and lower-than-expected demand going into the summer driving season. The latest Deloitte forecast for WTI in 2017 is US$48 per barrel, and C$59 per barrel for Edmonton Light.

For natural gas, the forecast notes that the differential between AECO and Henry Hub continues to be unusually high, at nearly double the historical average over the last five years. The main reason for this appears to be new LNG facilities, primarily along the Gulf of Mexico, that have opened up additional export opportunities for excess natural gas supplies in the southern United States. Deloitte says average temperatures this summer should have little impact on prices and is forecasting Henry Hub to be US$3.10/Mcf in 2017 and AECO to be C$2.40/Mcf.

For Deloitte’s complete oil and gas price forecast dated July 5, 2017, visit our website.

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

For more information, please contact:

Stephanie Gough
On behalf of Deloitte

Tonya Johnson
Media Relations, Deloitte

Did you find this useful?