In my opinion, OPEC will extend their production agreement into 2018 (March or June) and the announcement will push WTI over $50/Bbl. Weekly draws from U.S. storage (crude oil and refined products) will continue through the summer, pushing WTI over $55/Bbl. If Russia also sticks to their current production targets (a reduction of more than 300,000 barrels per day), there is a chance we see WTI move into the $60 to $70 range by year-end. The U.S. shale oil producers don't need $60 oil to make money. Well level economics are strong in the Tier One areas of the Permian Basin, Eagle Ford, DJ Basin and Central Oklahoma SCOOP/STACK play at $50 oil.
Natural gas and NGL prices are much higher than they were a year ago. In fact, natural gas is up more than 50 percent and most natural gas liquids have doubled in price since dipping under $10/bbl in the first quarter of 2016. Unlike oil prices, which are determined on a global market, natural gas and NGLs trade on regional markets. The U.S. natural gas market is much tighter than it was a year ago and demand will exceed supply by the 4th quarter. Growth in the U.S. petrochemical industry is driving up demand for NGLs.