CALGARY – Business consultancy Deloitte says an unexpected continuation of oversupply in both oil and natural gas will mean lower prices for longer.
The firm is forecasting oil prices to average below US$50 a barrel for 2016 and 2017 as demand growth for oil slows before prices start a slow rise to US$80 a barrel by 2022.
North American benchmark oil was trading at under US$34 a barrel on Wednesday.
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It also expects natural gas prices to stay low in the near term as natural gas storage levels sit at a five-year high and Canada is facing a potentially warmer winter this year.
Deloitte is forecasting the AECO Alberta natural gas trading price to be $2.45 per thousand cubic feet for 2016, while in 2014 it averaged $4.59 per thousand cubic feet.
Longer term, the firm says Alberta’s commitment to phase out coal-fired electricity generation could help boost natural gas prices once the infrastructure is in place.