The oil and gas industry can go from being consistent in being sporadic in an instant. Prices of crude oil can plummet or skyrocket overnight because so many countries have involvement in the industry. One country’s actions could have effects on the entire world. 2019 is off to a good start for most oil companies. For example, BP posted large profits for the fourth quarter of 2018; their 2018 replacement cost profit was $12.7 billion for the entirety of 2018.
Bob Dudley, chief executive of BP, said: “This is a really good quarter, and, actually, the end of a great year for us.” He explained to CNBC that his company had doubled earnings and returns from 2017. As a result of his announcement, BP shares rose by 3% earlier in February. BP’s 2018 fourth-quarter was a 65 percent increase from 2017’s fourth quarter. This can partially be attributed to the acquisition of BHP’s U.S. shale properties and assets.
Dudley is predicting an excellent 2019 for the oil and gas industry. He explained to CNBC that he expects oil prices to remain between $50 and $65 this year. The price of crude oil isn’t the only thing that determines a successful year for the oil industry though. The sudden drop in oil prices in December already has many companies rewriting their 2019 projections, but there are other things they must consider as well.
There is currently a pipeline capacity bottleneck in the Permian Basin. However, some experts believe that this issue will be resolved by the end of the year. Despite this, profits are expected to break records within the first half of the year. A majority of the drilling is still expected to take place in Texas.
Many believe that oversupply will cause prices at the pumps to drop at some point in 2019. This may be good news for consumers but bad news for companies. They may experience a slump in profits sometime in the Summer, but for the most part, oil prices are expected to be steady until 2020.
These predictions are not sure things of course. In an industry that is continuously changing and always competitive, things can change in an instant. Truthfully, no one knows what 2019 holds in store for the oil industry. Economy experts and industry leaders can only assume what’s in store.