Schlumberger (SLB) is set to announce its 3Q15 earnings after the market closes on October 15, 2015. Since January 1, SLB has slightly outperformed the OFS industry and some of its peers.
The consensus of the rising inventory and rising production will weigh on natural gas prices. Natural gas prices could see support at $2.30 per MMBtu.
The natural gas inventory rose for the 26th consecutive week for the week ending September 25. The inventory could rise for the week ending October 2, 2015.
The above normal weather in the winter will curb the heating demand. It will reduce the demand for natural gas and negatively influence natural gas prices.
November WTI crude oil prices rose for the third day. Prices have been fluctuating between $44 and $48 per barrel since September 2015.
The slowing US crude oil production could narrow down the crude oil supply and demand gap. It could support crude oil prices in the short term.
On October 6, the API will publish the weekly crude oil inventory report. It reported that crude oil stocks fell by 1.2 MMbbls for the week ending October 2.
November WTI crude oil futures contracts trading in NYMEX rose by 4.9% on October 6. Crude oil prices rose due to slowing US production and rising retail demand.
The WTI-Brent spread has converged significantly since February this year, when the differential widened to ~$12 per barrel.
USO mirrored WTI crude oil futures throughout the week, but it delivered higher returns compared to WTI crude oil at the end of the week.
West Texas Intermediate crude oil prices decreased 0.35% in the week ended October 2, 2015, compared to the previous week ended September 25.
NYMEX-traded natural gas futures contracts for November delivery show the emergence of a downward trending channel. On October 5, prices were steady at the key support level of $2.45 per MMBtu.
The EIA reports that in the week ended September 25, natural gas stocks rose for the 26th straight week. The consensus rising natural gas stockpile should weigh on natural gas prices.
On October 5, November natural gas futures contracts closed at $2.45 per MMBtu for the second straight day. Prices were almost flat due to a mild winter weather forecast.
As of September 30, the offshore drilling industry valuation multiple stands at 5.68x. This falls between the highest EV/EBITDA of 9.94x in 2006 and the lowest multiple of 2.21x in 2009.
Along with demand and supply dynamics, day rates are affected by factors such as rig specifications, regional differences, water depth, and the jobs undertaken.
Utilization rates in the North Sea decreased to 70% compared to 75% from last month. The Middle East recorded a higher utilization rate of 71% compared to last month’s 70%.
The utilization rates for rigs have drastically fallen compared to their historical rates. The utilization rate gauges demand and activity in the offshore industry.
During the week ended September 18, the US rig count remained same from the previous week’s count of 31. The rig count is an important yardstick for gauging the demand and outlook of the offshore drilling industry.
Goldman Sachs predicts oil prices to be near $50 per barrel for the next 15 years. As the forecast for oil prices is below the break-even prices, this significantly affects the drilling plans of oil companies.