This November is is a much more import¬ant and unusual November than we’ve normally seen. Longer term, the Paris climate accord officially takes effect this month, but it remains to be seen what sig¬nificance this could have on the oil and gas industry. The enviros think this is the begin¬ning of the end of fossil fuel use; ExxonMo¬bil and BP say not so fast.

Nearer term, early this month we’ll have the results of the most contentious U.S. presi¬dential election in decades. The outcome will have a profound effect on the industry; we’ll leave that commentary for next time.

And on Nov. 30, OPEC meets. Soon we’ll know if it will implement quotas to trim pro¬duction or hold it flat—and whether Russia will go along in any way or forge its own path. Russian President Putin hinted he’d cooperate to cut oil output, but at the same time, top Russian oil executives said they oppose such a deal.

There are too many uncertainties to juggle here: DUCs in U.S. shales, global oil storage, India’s growing oil demand, China’s economy, interest rates, and the mess that is Europe. At press time, OPEC’s crude basket traded at $48/bbl but WTI was flirting with $50.

Beleaguered Saudi Arabia announced it will raise $10 billion to $20 billion in bonds, its first bond sale on the international mar¬ket. While the kingdom has been hurt by low oil prices (its 2015 budget deficit was about $100 billion), it is pumping at record levels (so is Russia, for that matter).

Amidst all this, the Houston chapter of the Society of Petroleum Resources Economists met recently—on the same day that WTI finally reached $50—to host a discussion of these issues and the oil price outlook for 2017.

“Being an analyst, I don’t try to get it really, really right; I try to not get it wrong. It’s kind of like in marriage,” joked Carl Larry of Frost & Sullivan. Each speaker nod¬ded in agreement.

He said any projections made in this volatile market don’t necessarily have to make sense, but they do have to make money. One key fac¬tor is whether the Federal Reserve Bank raises interest rates and, whatever happens to the dollar, the Saudis must take that into account.

“It’s not about crude oil supply; it’s all about demand, and it still is. U.S. demand is still high, and that makes a big difference going forward,” he said. His 2017 projection: $44 to $54.

Raoul Le Blanc of IHS Markit weighed in next, saying he doesn’t think OPEC is that meaningful any more. “We divide the world into three parts: the Big Six in the Gulf, which have surging production; the Big Three non-OPEC guys, which are the U.S., Russia and Canada; and finally the rest of the world.”

In 2017 new projects will come onstream in Russia, Brazil, Canada and elsewhere. But he said the global supply balance still waits for drawdowns from inventories, and U.S. production may start to climb in 2017 after bottoming out this fall.

IHS Markit has a new metric: the amount of production brought onstream per $1 mil¬lion spent. “Now you are getting twice as much oil as you did two years ago for the same dollar,” he noted, citing improved well design and lower costs. His conclusion: $40 is the new average breakeven in the U.S.

Wood Mackenzie analyst Afo Ogunnaike said global oil supply has been more or less flat this year and he expects the same in 2107, although demand will be up. He thinks U.S. output will surpass current and last year’s levels.

His conclusion: Brent will average $54 next year and reach $60 by year-end.

Tony Starkey of Platt’s Analytics said money flows, speculation on paper vs. phys¬icals, and hedging matter to this equation. He said market fundamentals and OPEC, the IEA and the EIA indicate oil prices will remain low, and not exceed the low $50s even by the end of 2017.
After the election, when the new presi¬dent begins to think about bolstering the U.S. economy, we hope energy issues remain a key component.

Exactly one month before the election, the API drew attention to a report that the White House’s National Economic Council issued on trends in American manufactur¬ing. It cited the vast and increasing role that natural gas plays in the economy.

“The surge in American natural gas pro¬duction has lowered energy costs for man¬ufacturers and driven job growth, with U.S. natural gas costs one-half that of Europe and one-third that of Asia,” according to the report.

“Recent analysis estimates that industrial sector consumers of natural gas were bet¬ter off by about $22 billion between 2007 and 2013 due to abundant, inexpensive shale gas.”

This is but one of several positive data points about American energy that the new president must heed.

WoodMac’s Ogunnaike concluded by reminding us of a truism: “One thing we can bet on is that things will occur that nobody can foresee.”