Hit the brakes: Sentiment for 2014's WTI oil price isn't great, but it is still solid.

A survey by Bernstein Research in mid-December found that prices would fall about $6 per barrel in third-quarter 2014 compared to third-quarter 2013, said Bob Brackett, senior analyst, in a report.

The firm polled 168 portfolio managers and analysts for its fourth-quarter 2013 survey. Their sentiment is shifting to natural gas and refiners amid struggles with West Texas Intermediate (WTI) pricing, Brackett said.

The most common reasoning is that prices will fall as spare global capacity rises and geopolitical risks, such as tensions with Iran, wane.

“Only 2% of respondents see next 12-month pricing above $110 per barrel, which fell from 9% in the third quarter,” Brackett said.“Interestingly, industry sentiment relative to buyside sentiment for oil remains high.”

Expectations for WTI and Henry Hub prices average $94 per barrel and $4.04 per thousand cubic feet (Mcf) over the next 12 months among the survey respondents.

In November, the monthly Henry Hub spot price was $3.64.By late December, it exceeded $4.20.

“This is below our expectations for WTI but in line for Henry Hub,” Brackett said. “Respondents' WTI outlook was comparable to forward-strip pricing of $95 per barrel during the week of the survey, while the Henry Hub outlook was 4% below the week's strip pricing, implying that the polled investors see more downside to elevated Henry Hub prices.”

Expectations are climbing that gas will rebound with a cold winter in 2014.About 44% polled said that in the next 12 months gas prices will average $3.50 to $3.99, while 36% expect $4 to $4.49.

“We generally agree that oil prices should be ahead of current futures, but expect that gas prices will remain near $4/Mcf due to abundant low-cost supply in the Marcellus.”

Energy investors remained interested in the E&P group overall, with 33% of respondents combining oil and gas E&Ps, but with a narrower margin and more interest in gas over oil, the survey found.

Refiners, integrated oils, offshore drillers, construction and utilities saw increases, while interest declined in land drillers and oil services. After E&Ps, investor sentiment remains most supportive of the oil services.

—Darren Barbee

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