Energy Company Expected to Bump E&P Spending in 2017

Global oil and gas companies are expected to raise exploration and production (E&P) spending in 2017 by 7 percent, marking the first increase in three years, Barclays said on Monday.

Oil prices have recovered after a more than two-year slump caused by a glut due to U.S. shale oil flooding the market. Prices have risen about 21 percent since the OPEC, which accounts for a third of global oil output, signed an agreement in November to curb supply.

Brent crude futures were down 2.03 percent at $55.94 a barrel at 1214 GMT (7:14 a.m. ET) on Monday. Prices had fallen to a more than 12-year low of $27.10 last January.

“With OPEC putting a floor on oil prices, operators have greater confidence to drill and complete, although the early stages of the recovery will be uneven,” Barclays analysts wrote in a report.

Barclays also said it expects North American oil companies to lead the spending growth with a 27 percent jump. Production, however, is expected to fall as higher service costs are likely to dilute the effect of a larger budget, the brokerage said.

International spending is expected to increase 2 percent, according to Barclays’ survey of 215 global oil and gas companies. The survey was conducted when Brent was trading at about $55 a barrel and WTI at $50 a barrel.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza