Deloitte expects oil and gas prices to stay low as oversupply continues

CALGARY - Business consultancy Deloitte says an unexpected continuation of oversupply in both oil and natural gas will mean lower prices for longer.

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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.

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.

North American benchmark oil was trading at under US$34 a barrel on Wednesday, while the AECO natural gas spot price was $2.40 per thousand cubic feet.


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