Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Tight Oil Supply and US Production Downgrades Expected to Drive Prices Up and China Growth Concerns
03/12/2024
- Oil market braces for tighter supply, RBC's Helima Croft forecasts
- Croft announces significant reductions in US oil output projections
- Expect rising crude prices with Brent poised to reach $85
- Bonus part: China aims for a 5% economic growth target in 2024
Crude oil prices are on the verge of a significant rise, as per Helima Croft, a top commodities strategist at RBC Capital Markets. She highlights a looming shift in the oil market's supply-demand dynamics, forecasting a potential slowdown in global crude production. This slowdown might push Brent crude prices to $85 in the latter half of 2024.
"It's not that we're saying that US production is not going to grow. It's just a question about, were the gains that we saw last year due to particular unique circumstances that are not going to be replicated this year," Croft said.
The US, after a standout year of oil production in 2023, is expected to see a slowdown, with growth projections halving from 1 million to 500,000 barrels per day this year, based on insights from the recent International Energy Week. This trend is not unique to the US; other major oil producers, including Guyana, face challenges in maintaining their recent production booms.
Additionally, tensions in the Middle East could further constrain supply, particularly if the conflict involving Israel and Hamas escalates to involve Lebanon, a scenario Helima Croft views as a significant risk given Iran's position in global oil production.
OPEC+ members plan to sustain their production cuts, extending a collective reduction of 2.2 million barrels per day through June.
Brent crude edged up slightly to $82.88 a barrel, while U.S. West Texas Intermediate (WTI) experienced a minor drop to $78.68. This year, Brent has seen an almost 8% increase.
Despite these price movements, Croft tempers expectations of oil hitting $100 a barrel soon. Meanwhile, global oil demand continues to rise, with projections suggesting a peak increase of 1.2 million barrels per day by 2028. This could lead to a market shortage as early as 2025, according to Vicki Hollub, CEO of Occidental.
China's Economic Reforms
Oil prices found their footing after a recent dip, thanks to OPEC+'s commitment to keeping supplies tight. This decision counterbalanced worries about China's economic expansion and global interest rate uncertainties.
China aims for a steady 5% growth in 2024, matching last year's target. However, the absence of significant stimulus measures to boost the economy has left investors wanting more.
Tamas Varga from the brokerage PVM notes that despite the lukewarm reaction to OPEC+'s decision to continue its production cuts, a tightening in the global oil supply is expected. This tightening could help prices recover from any short-term drops, whether they're real or just perceived.
OPEC+ recently decided to keep reducing their oil output by 2.2 million barrels per day into the next quarter, showing a serious commitment to market stability.
Concerns extend beyond China to broader economic uncertainties, partly due to unclear directions on interest rate cuts in the U.S. and elsewhere. The Atlanta Fed President, Raphael Bostic, mentioned that with the economy and job market in good shape, there's no immediate need to lower rates.
Upcoming U.S. inventory reports are also in the spotlight. They're expected to show an increase in crude stocks by about 2.6 million barrels, with a forecasted decline in distillates and gasoline reserves.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Global Oil Supply and Demand Trends Overview: Insights from Rextag
Global oil supply and demand saw notable changes in April 2023. Liquids demand declined by 0.7 MMb/d to 99.9 MMb/d, with gains in China and Europe offset by reduced demand in Japan and the Middle East. OPEC 10 production remained stable at 29.5 MMb/d, while Saudi Arabia increased output by 0.3 MMb/d. Non-OPEC production declined slightly, Russian production dropped further, and US shale production remained steady. Combined production in Iran, Venezuela, and Libya remained unchanged. Commercial inventories increased, and OPEC+ implemented production cuts. Economic sentiment remains uncertain amid rising global inflation.
The growth of the U.S. oil and gas industry in 2022 will come from smaller companies and private businesses
Forecast: Bank of America expects to see a major bump in US crude oil production in 2022. Such growth from a non OPEC member will impact world oil market balances in times of tight supplies. Still, crude prices should hold well above $70/bbl next year and could, potentially, jump as high as $100/bbl. By 2022, oil output is expected to grow by 800,000 bbl/d, and more than half of that growth will come from #privately-held producers. For a more in-depth analysis of the forecast check out our blog.
The rapid growth of natural gas production in the Permian Basin is pushing existing infrastructure to its limits, and additional pipeline projects are on the horizon to meet rising demand, according to East Daley Analytics. Despite ongoing price volatility—marked by repeated declines—demand for expanded energy markets continues to surge.
Dominion Energy has struck a major deal by selling half of its stake in the Coastal Virginia Offshore Wind (CVOW) project to Stonepeak, one of the world’s leading infrastructure investors, for $2.6 billion. While Dominion will retain full control over the project’s development and day-to-day operations, this partnership gives Stonepeak a non-controlling 50% interest.
Landfills are essential to America’s waste management system, yet they face several operational, environmental, and regulatory challenges. With over 2600 active municipal solid waste (MSW) landfills across the country, they occupy an average of more than 600 acres, which is roughly equivalent to 500 football fields. Methane emissions from landfills contribute significantly to global warming, accounting for 15.1% of U.S. methane emissions. As the waste sector is a major contributor to methane emissions, there is a growing emphasis on improved monitoring, reduction technologies, and the integration of renewable natural gas (RNG) solutions to mitigate the impacts of these emissions.