Oil and Gas Market Outlook as Q1 Closes

Call it the effects of a war, wrapped in a pandemic, inside an energy transition. Or just call it oil and gas March markets madness. Either way, it comes down to supply and demand.

Oil and gas markets comes down to supply and demand, and influenced by demand for jet fuel and coal. (Source: Hart Energy; Karolis Kavolelis, Ironwas, Mr.PK, beloved67, Vector mix/Shutterstock.com)

Oil and gas markets comes down to supply and demand, and influenced by demand for jet fuel and coal. (Source: Hart Energy; Karolis Kavolelis, Ironwas, Mr.PK, beloved67, Vector mix/Shutterstock.com)

Russia’s invasion of Ukraine dumped a large turnip of uncertainty into the punch bowl of oil and gas market projections, but analysts are keeping an eye on two key factors that will determine how those markets behave over the next few months. They are jet fuel and coal.

Jet fuel, refined from crude oil, has yet to fully spring back to life following the near-grounding of the global commercial air fleet at the start of the COVID-19 pandemic in 2020. Coal demand, on the other hand, has been showing stronger signs of life than suits the comfort level of natural gas producers.

Much of this March’s market madness stems both from the questions of how quickly oil and gas producers can ramp up production, and how quickly they want to ramp up production, given the cash-flow-over-growth strategies that investors favor. Stability may be an elusive quality this year.

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Joseph Markman

Joseph Markman, senior editor for Hart Energy, covers markets and provides data analysis for all Hart Energy editorial products.