It has been a turbulent few years for British oil and gas companies, with oil hitting $27 per barrel in early 2016. However, with much going on in the world of oil and gas, things could be about to change. This article will look at some of the influencing factors which may be worth watching through 2017.
British oil and gas goliaths BP have recorded a better than expected profit in the first quarter of this financial year, up 5% from last year, largely as a result of higher oil and gas prices. Compared to the last quarter of last year, oil prices have increased by 35%, which could set the precedent for a good year for the company.
Some may see this as a fresh start for BP, who lost a fortune after the 2010 Deepwater Horizon Disaster, and looked to be in a dire position financially. As a result, shares are likely to increase and confidence in oil and gas grow.
Oil Output Cut
At the end of 2016 Opec (Organisation of the Petroleum Exporting Countries which coordinates the petroleum policies of its members) and non-Opec countries agreed to cut their oil output in order to combat falling oil prices. This could be an effective measure to generate growth in the asset, and investors using platforms like ETX Capital may well want to keep an eye out on the likely effects this will have on market movements.
There are, however, fears that the intended price rise this may cause in oil will result in companies breaking free of the agreement and producing more than their agreed quotas. This would likely offset the cut in output and possibly land prices back where they started.
Price Rise in Gas and Electricity
There are set to be significant increases in household bills for gas and electricity, as large energy firms make changes to the billing system and increase standard tariffs. Some could see their bills increase by hundreds per year, which is causing anger and concern amongst consumers affected.
Should this not be addressed by British energy companies, there could be a crash in consumer confidence and thus a fall in company share prices as a result. This may well induce market volatility in the coming months, so investors will no doubt want to look out for any relevant upcoming news on this.
Curb on the Big 6
Prior to the announcement of another British general election, prime minister Theresa May had announced that intervention could be in the pipeline for the largest energy companies, who have been accused of charging some of the poorest families the most expensive tariffs.
There could, therefore, be a cap on energy prices in the future, although the general election will most likely delay any action for the next few months. Should any cap be introduced, shares in British oil and gas companies may well take a hit in the short term as profits slow.
2017 will undoubtedly be an interesting year for oil and gas. Those investors who thrive on market volatility may well be in luck as potential changes to this sector come into play, and prices for the resources fluctuate over the coming months. Those looking for stability in the market, however, may have to wait a little longer.