From the February 2013 issue of Futures Magazine • Subscribe!

Clearing the view on energy's 2013 outlook

 

The 2013 energy outlook still is cloudy for traders and analysts as the U.S. and global fiscal and economic situations remain volatile, but traders and analysts generally expect stable or slightly higher prices in the first months of 2013.

Factors that they cite in their outlooks include still-muted economic growth in the United States and recessionary conditions in Europe and Japan, along with emerging economies like China, India and Brazil that will depend on demand from elsewhere to drive growth. 

Natural gas prices can be expected to stay in a range from $3 to the upper $4 range under a normal weather scenario, predicts Kyle Cooper, managing director of research at Cypress Energy Capital Management LP. Cooper says crude oil — without any geopolitical crisis such as an Israel-Iran conflict — should maintain a $15-$20 range centered in the upper $80 area. Gasoline, he adds, is to a large extent rangebound near current wholesale pricing levels. “Right now the market is pretty close to fair value. The market is relatively well balanced,” Cooper says.

Generally higher oil and natural gas prices, however, is the forecast of Spencer Patton, chief investment officer of Steel Vine Investments. “Assuming the fiscal cliff does get resolved, crude oil likely has put in a low ($77.28) that I don’t think it’s going to revisit any time soon,” he says. “I expect it’s going to be working its way higher as we work toward some level of recovery.”

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