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Global demand for crude oil continues to rise but supply growth remains limited, which will lead to higher prices later this year, a Pioneer Natural Resources (NYSE:PXD) executive said Thursday.
Production has been limited by higher labor and materials costs that have squeezed profit margins as well as investor demands to limit spending, Executive VP Beth McDonald told the RBN Energy crude export conference in Houston.
“That squeeze in the margin is really keeping U.S. E&Ps from moving forward in a significant way,” McDonald reportedly said, thus “you will still see those modest [production] growth rates and those low reinvestment rates because we continue to focus on returning cash to shareholders.”
For its part, Pioneer (PXD) also will remain focused on capital discipline, despite Saudi Arabia’s announced 1M bbl/day output cuts starting in July, McDonald said.
Crude should trade in the $70-$100/bbl range over the next 3-5 years, she also said.
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