Believe it or not, it has been a strong 12 months for ASX listed oil and gas companies.
The S&P/ASX 200 Energy Index (ASX:XEJ) which includes major producers Woodside Petroleum Limited (ASX: WPL), Beach Energy Ltd (ASX: BPT) and Oil Search Limited (ASX: OSH) has risen around 16%.
Take that S&P/ASX 200!
To help you to understand the current landscape here are three things every oil investor must know today:
1. The price of oil has been tearing it up
The price of Brent crude oil is up 18% over the last 12 months and currently sells for around US$57 per barrel.
It's a phase of redemption from the lows of below US$30 a barrel in 2016. However the rising Aussie dollar has eroded a small percentage of this gain for local producers.
Why is oil rising? One reason is the weather with recent hurricanes in the U.S. forcing refineries off-line and disrupting exports. Meanwhile on the other side of the Atlantic Europe's largest refinery was shut down in July after a massive fire pushed prices up.
A potentially more structural shift however is rising industrial demand. Bloomberg News reports that demand for diesel in particular has jumped as industrial activity around the world has picked up, lifting consumption "well above the 10 year average".
2. LNG producers may have just dodged massive export restrictions
For years now there has been talk of an impending energy crisis as domestic gas supply contracts expire and international demand sees new LNG production shipped off into the ether.
It was a ridiculous situation, but this week major LNG export projects, including Santos operated Gladstone LNG, and Origin Energy Ltd (ASX:ORG) operated Australia Pacific LNG, appear to have dodged export restrictions by promising to plug the supply gap in 2018.
According to Platts, Deputy Prime Minster Barnaby Joyce likened the threat of export controls to police carrying guns and being prepared to shoot if needed. Crisis averted I guess.
3. Woodside Petroleum wants to shower you in dividends
With strong production and few major projects on the horizon Woodside Petroleum Limited (ASX:WPL) says it hopes to maintain its current payout ratio of 80% of net profit in the coming years.
The current phase of strong cashflows is expected to last until around 2021. At this time Woodside will increase spending on new projects to develop existing assets to meet forecast LNG supply shortfalls. You can read more about Woodside Petroleum's dividend here.
