Will 2016 Be "The Year For Correction?" Harold Hamm Thinks So. [Video] #commoditytrends

By 21st December 2015 Industry News No Comments

Continental Resources CEO Harold Hamm thinks the oil market will recover in 2016 as supply and demand come into balance. He’s not the only one. His U.S. E&P peer, Hess CEO John Hess, said last week that he also thinks prices will likely be at around $60/bbl by the end of 2016.

Speaking on CNBC Monday morning, Hamm said, “We’ve seen tremendous growth in the market for our supply. It’s up about 3 percent on an annual basis, so it’s quickly correcting…2016 will be the year for correction, and we estimate the first half.”

Because of efficiency gains in the U.S., Hamm thinks the industry does not necessarily need oil prices to return to $100/bbl.

His words follow those of Hess CEO John Hess, who last Friday acknowledged that oil prices are “definitely in a lower-for-longer environment,” but they will still almost double from current levels (~$35/bbl) by late next year. “By the end of next year, I think the price will start moving up as supply growth starts to retard [and] demand goes up…All of a sudden the market is going to draw on inventories, and you’re probably going to be looking at least at $60 by the end of next year,” Hess said.

Hamm sees oil prices returning to $40 to $50 in the first half of 2016. He also projects that the gap between Brent and WTI will narrow after the lifting last week of the U.S. oil export ban.

Hamm said that allowing U.S. oil companies to export crude will help the product find a market in nations with refineries able to process it. He said that foreign acquisitions of U.S. refineries has decreased capacity for U.S. oil.