Deloitte

Deloitte

April 03, 2012 08:00 ET

Under-Demand, Over-Supplied and Landlocked

AJM Deloitte releases March 31, 2012 price forecast

CALGARY, ALBERTA--(Marketwire - April 3, 2012) -

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High world crude oil prices due to geopolitical influences and low North American natural gas prices continue to dominate, according to the latest quarterly price forecast released today by AJM Deloitte.

"As I indicated in the previous forecast, we are seeing a continued divergence from the North American market compared to the rest of the world," says Ralph Glass, AJM Deloitte's Director of Energy Valuation and Operations. "As we enter into the injection season - beginning in April - the larger concern for North American gas producers is the collapse of the natural gas price due to an unseasonably warm winter, experienced in both the United States and Canada, which has left storage levels at record highs for this time period."

"Without an increase in demand for North American natural gas, be it industrial usage or LNG exports, the price is expected to remain low for the next few years," says Glass.

On the international scene, concerns over the political situation in Syria and Iran has driven the Brent, UK reference crude oil price to over US$125.00/bbl while West Texas Intermediate (WTI) sits around the US$105.00/bbl mark.

"The widening differential between Brent and WTI is another indication of the over-supplied North American market," says Glass. "This time it's on the crude oil side due to limited access to off-shore markets, especially in Canada."

AJM Deloitte's March 31, 2012 Canadian domestic forecast predicts an Edmonton real price of C$98.00/bbl for 2012 and continuing into the foreseeable future while the WTI Cushing price is likely to hold at US$100.00/bbl. On the international commodity markets, AJM Deloitte forecasts the Brent spot price will continue to receive a premium in comparison to US prices with Brent at US$115.00/bbl for 2012, forecasting a drop by US$5.00/bbl in 2013 and a further US$5.00/bbl in 2014. In natural gas, AJM Deloitte forecasts the Alberta AECO average price at C$2.30/Mcf in real terms for 2012, increasing to C$3.20/Mcf in 2013 and growing to C$6.20/Mcf by 2021. NYMEX natural gas for 2012 is forecast at US$2.80/Mcf in real terms and rising to US$6.50/Mcf by 2021. International LPG prices are forecast to continue to be higher than North America, with the British National Balanced Point (BNP) price over US$9.00/Mcf and Asian markets seeing prices over US$12.00/Mcf.

Read AJM Deloitte's complete oil and gas price forecast dated March 31, 2012.

AJM Deloitte is an energy and resource advisory practice, fully integrated with Deloitte's existing professional services and offering reservoir engineering and geological consulting services, including: corporate evaluations, acquisition and divestitures, reservoir studies and simulations and advisory services.

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Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 8,000 people in 56 offices. Deloitte operates in Québec as Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Deloitte & Touche 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 www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

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