The U.S. oil production is expected to witness continued growth this year and beyond, driven by rising oil prices and high energy demand worldwide, creating several growth opportunities for companies offering energy services.
Given the industry’s rosy prospects, quality energy stocks NOW Inc. (DNOW – Get Rating), MRC Global Inc. (MRC – Get Rating), and Solaris Oilfield Infrastructure, Inc. (SOI – Get Rating) could be solid buys this week.
Last month, the world’s major crude exporter Saudi Arabia announced extension of its voluntary oil production cut of 1 million barrels per day (b/d) through the end of 2023. Fellow heavyweight oil producer Russia also extended its 300,000 b/d reduction of exports until the year-end.
Before pulling back from those levels, Oil prices surged to their highest mark in more than a year two weeks earlier due to scarce supply and inventory supplies. The U.S. West Texas Intermediate futures touched $95.03 a barrel, marking the highest since August 2022. Brent crude also hit the highest level since November last year.
Further, as per U.S. Energy Information Administration (EIA) forecast, Brent crude oil price could average $93 per barrel during the fourth quarter of 2023, an increase from $86/b in August. EIA expects the price to average $87 a barrel by the second half of next year.
According to the latest International Energy Agency (IEA) Oil Market Report (OMR), global oil demand remains on track to rise by 2.2 million b/d year-over-year to 101.8 million b/d in 2023, fueled by resurgent Chinese consumption, jet fuel, and petrochemical feedstocks.
Higher oil prices, robust demand for oil and gas, and solid well productivity are major drivers for continued growth in domestic oil production. In its September Short-Term Energy Outlook, EIA forecast U.S. crude oil production to average a record high of 12.8 million b/d this year and 13.2 million b/d in 2024.
As per a report by Consegic Business Intelligence, the global oilfield services market is expected to reach $468.58 billion by 2023, growing at a CAGR of 5.9%. growing adoption of oilfield services for drilling is proliferating the market’s growth.
In addition, technological advancements in the oil and gas industry led to the development of efficient and cost-effective drilling, exploration, and production techniques. This has increased the demand for specialized oilfield services.
In light of these favorable trends, let’s look at…
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