Dan Dicker – veteran oil trader, author, and founder of The Energy Word – says that will be the case, to a point. In the attached video, Dicker says the big takeaway for 2016 was not OPEC’s big deal, but domestic producers, and this has ramifications for next year.
“[2016] was about the US energy companies and how efficient they became, and how quick they were this time to react to a low crude price,” Dicker says. They cut capital expenditures and refinanced much of their debt and “managed to stay alive.”
As for 2017, many of the themes that sent oil on its roller coaster ride from the depth of the lows earlier in the year to new multi-month highs near the end will continue to play out – with domestic energy producers now standing to benefit.
“We’re seeing a very slow rebalancing in the energy market, we’re going to see a flattish, or slow to rally price,” Dicker predicts. “I had thought we’d see a very deep drop in oil prices which we saw early on in the year in 2016 in February and March, and we’d see a wipeout of a number of producers and see a very strong ‘V’ recovery in oil prices, but for the most part in 2016 and now 2017 we’re looking at a very low upward sloping increase in oil prices.”
Dicker sees WTI oil prices staying “comfortably above $50 for 2017, but comfortably below $70,” because at the higher end the market will get more production from US shale producers, “who have break evens around the $55 to $60 area,” he concludes.
If WTI oil can stay above $60 for a sustained period of time in 2017, which Dicker believes, domestic oil producers may finally benefit from tightening the belt back in 2016.
.Yahoo
