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The G7 proposal to impose a cap on the price of Russian oil and gas would introduce new supply-side risks by potentially disrupting Russian energy supplies. This could push global energy prices up further, but for now we still see Brent crude prices …
28th June 2022
Whilst OPEC+ has been failing to meet its production quotas in recent months, it will technically finish unwinding its pandemic-related supply cuts come September. We think OPEC+ will then move to a more liberal approach and allow the few members with …
23rd June 2022
Russia’s decision to once again cut supplies to Europe makes the region’s gas supply look increasingly precarious. The move will slow regional stock builds and keep prices historically high . Russia’s monopoly gas exporter, Gazprom, announced on Wednesday …
16th June 2022
The closure of the Freeport LNG facility in the US, for up to six months, adds to concerns about Europe’s ability to fill its gas storage tanks ahead of winter. We always suspected that supply concerns would re-emerge this year and, as a result, we …
15th June 2022
The EU’s sixth round of sanctions on Russia marks yet another defining moment in the West’s detachment from Russia’s energy trade. The sanctions were widely telegraphed in advance, though, so for now we still forecast that crude oil prices will remain …
31st May 2022
We expect US fuel prices to remain historically high this year due to supply constraints. As a result, we suspect that oil consumption in the US will remain seasonably low for much of the rest of the year. US implied product demand has fallen from a …
12th May 2022
News of force majeure on one of the pipelines in Ukraine bringing Russian natural gas to Europe just adds to our conviction that Europe is going to struggle to meet its gas needs over the next year. The heightened competition for gas imports suggests that …
11th May 2022
The EU proposal to end imports of Russian crude oil and petroleum products by the end of the year has long been in the works. If approved, we expect Russia’s oil exports to fall by around 20% this year, which in turn would keep oil prices over $100 per …
4th May 2022
Russia’s decision to suspend gas deliveries to Poland and Bulgaria from today because of a payments dispute will only strengthen the EU’s resolve to end its dependency on Russian gas, keeping gas prices historically high for months to come. The move also …
27th April 2022
Strong demand for LNG exports should lead to a higher average price of US natural gas this year. But we expect prices to ease back in the coming months as demand falls over the summer and output stays high . The price of US natural gas (Henry Hub) has …
14th April 2022
Commodity prices are as volatile as they’ve ever been. We don’t think volatility will ease until the war in Ukraine ends, because only then will we know the true extent of the Russia-related supply shock . Commodity prices are naturally volatile for many …
31st March 2022
The experience of the 1970s suggests that the ongoing war in Ukraine and its effects on commodity prices will reshape commodity markets for years to come. Most immediately, elevated prices are likely to lead to some degree of demand destruction. And …
29th March 2022
Saudi Arabia has so far resisted pressure from the US to raise oil production in order to dampen prices but, with Russian oil production and exports set to be disrupted, we think that a move in this direction is now more likely than not. While the Kingdom …
11th March 2022
Even if the West bans crude imports from Russia entirely, the Iranian experience suggests that there will still be ways for Russia to get its oil onto global markets. But any workarounds would take time to translate into a pick-up in exports, and at best …
Russia’s oil production is set to decline over the course of this year under the weight of Western sanctions, but the scale of the decline will depend on the extent of the sanctions. In this Update , we weigh up how a complete Western ban on imports of …
10th March 2022
While the plan to reduce Europe’s reliance on Russian gas this year seems achievable, it will only lock in higher-for-longer gas prices and prolong the squeeze on household incomes. The centrepiece of the European Commission’s “REPowerEU” package, …
9th March 2022
We think that a complete ban on Russian energy imports would cause the prices of Brent crude oil and European natural gas to surge to $160pb and €300/MWh in the near term and settle at still very high levels into next year. The Russian economy would …
7th March 2022
As fears over Russian oil supply mount, negotiations between Iran and world powers on reviving the Iran nuclear deal have been advancing in Vienna. If the nuclear deal is revived, we think there will be an immediate increase in Iranian supply, but fears …
2nd March 2022
Our estimates suggest that risk premiums are currently adding around 40% to commodity prices. This suggests that commodity prices could fall a long way whenever concerns over the Russia-Ukraine conflict begin to ease, though clearly this is unlikely to …
25th February 2022
The latest twist in the Russia-Ukraine crisis is likely to keep commodity prices elevated over the coming weeks and months. And if the situation spirals into a more serious and wide-ranging conflict between Russia and the West, commodity prices could rise …
24th February 2022
It is not in the economic interests of either Russia or the West to use trade in energy as a weapon against each other, but that is not to say it won’t happen. If energy flows were disrupted, we think oil prices could settle at around $120-140 per barrel, …
22nd February 2022
Oil production in Venezuela has been showing signs of life, and there is probably scope for further gains in the near term. But it would require a lifting of sanctions and significant investment over many years to bring production back to levels seen a …
21st February 2022
After it was slashed in the wake of the pandemic, capital expenditure by US oil producers is now rising. Given oil prices will probably remain high for a while, we suspect the recovery has longer to run. This could give a lift to US oil production this …
18th February 2022
In this Update , we discuss the possible ramifications for the global oil and natural gas markets of a Russian invasion of Ukraine. Much would depend on whether Western sanctions are placed on Russian energy companies and/or Russia decides to withhold …
16th February 2022
Growth in LNG exports, particularly from the US, will put downward pressure on natural gas prices in Asia and Europe. However, it will not be enough to return prices to pre-pandemic levels as stocks are low and demand growth is likely to remain strong, …
11th February 2022
A Russian military invasion of Ukraine would adversely affect the euro-zone economy by further disrupting the market for energy, pushing up inflation and reducing households’ real incomes. However, any economic fallout would probably be fairly small and …
25th January 2022
Oil prices have risen sharply since the start of 2022 and natural gas and coal prices have remained high. We continue to expect energy prices to fall this year, but the latest developments on supply suggest that they will not fall by quite as much as we …
19th January 2022
The deadlocked end to talks between Russia, the US and NATO and subsequent hawkish noises from Russian officials have caused a risk premium to emerge on Russian asset prices and will keep the prospect of tighter Western sanctions on the table. The …
14th January 2022
We see energy prices broadly falling this year as slower global economic growth should cool demand growth, but low stocks of many fuels mean prices will remain historically high and volatile for some time . At the start of last year, we forecast that the …
11th January 2022
We always expected European natural gas prices to remain high over the winter because of low stocks, but heightened uncertainty about supply from Russia has caused prices to skyrocket again. Assuming supply isn’t affected, though, our expectation is that …
21st December 2021
Our estimates show a fall in the risk premium in the oil price since the emergence of the Omicron variant, as concerns over demand resurfaced. But the risk premium is still large, which adds weight to our view that oil prices will fall next year as the …
16th December 2021
Omicron will weigh on jet fuel demand in the next few months, but the wider hit to demand is still unclear. And although OPEC+ decided to push ahead with its planned oil production increases, we think it will struggle to raise output by as much as planned …
3rd December 2021
We were already downbeat on the outlook for most commodity prices in 2022, not least because we thought that prices had lost touch with demand fundamentals. The risk of Omicron-related effects on demand just adds weight to our view . The prices of most …
29th November 2021
The announcement of the co-ordinated release of oil reserves by the US and other large oil consumers should mean higher supply (and downward pressure on prices) but it will come at a time when we expect that the market will be in a surplus anyway. What’s …
25th November 2021
We have left our near-term forecasts for energy prices (which are historically high) unchanged after reflecting on the latest weather forecasts for the upcoming Northern Hemisphere winter. Temperatures are expected to be slightly higher than average over …
24th November 2021
European natural gas prices were in the news again last week, soaring by 18%. Given stocks are still low and there are few signs of extra flows from Russia, we think that prices will remain high in the near term . The European natural gas market has …
23rd November 2021
We expect US crude oil production to rise by the end of next year, but remain well below levels in early 2020. What’s more, with non-US oil production set to grow at a faster pace than US oil production, the Brent-WTI price premium is likely to remain …
26th October 2021
Coal prices are likely to remain high over the next six months as high demand weighs on already-low stocks. Prices should drop back next year, though, as demand growth moderates and supply improves . The price of coal has roughly tripled since the start …
19th October 2021
The price of European natural gas (TTF) surged by around 35% this morning, before crashing back down on Putin’s reassuring comments about Russian supply. The latest price moves appear speculative, and we retain our view that it is just a matter of time …
6th October 2021
We expect a gradual normalisation in demand growth and a rebound in supply will start to weigh on oil prices from the fourth quarter. So far this year, growth in demand has outpaced supply, helping prices to hit multi-year highs, but we expect this …
4th October 2021
A mild winter in the Northern Hemisphere, a substitution of gas for other fuels in electricity generation, and/or a rise in supply via Nord Stream 2 could all send European gas prices lower in the months ahead. But even if prices start to fall back soon, …
24th September 2021
Coal and natural gas prices have soared around the world on the back of unseasonable weather and disruptions to supply. And even if the weather normalises and supply rebounds soon, we expect prices to remain high at least into the start of 2022 as stocks …
10th September 2021
While we expect both drilling activity and oil production in the US to pick up slightly over the next year or so, we doubt it will return to pre-pandemic levels anytime soon. This should keep the Brent-WTI spread narrow but is unlikely to prevent oil …
11th August 2021
We think a reversal of the factors that have fuelled the recent surge in European natural gas prices, namely high LNG prices, constrained supply and depleted stocks, will bring prices back down to earth by early 2022. However, a strong economic rebound …
20th July 2021
The failure of OPEC+ to agree to new production quotas has created considerable uncertainty about the group’s oil production going forward. In this Update , we lay out three possible scenarios for OPEC+ output in the coming months and what they would mean …
6th July 2021
Strong industrial demand and constrained domestic supply will support US natural gas prices throughout the remainder of this year. However, we expect that the average price will fall in 2022 in large part because of higher production . The ongoing …
28th June 2021
Global oil demand looks to have held up much better so far in 2021 than during 2020, despite a resurgence of COVID infections in many parts of the world . We expect strong oil demand growth to continue for the rest of the year, but this won’t stop rising …
17th June 2021
Higher production from OPEC+ member states and in the Americas means that global oil production is set to rise sharply over the next eighteen months. This is the reason why we expect oil prices to fall from Q4 this year and throughout 2022 . Global oil …
16th June 2021
After rising (and falling) sharply at the start of the year, Asia LNG prices have started to push higher again recently. This latest rise seems to have been driven by a rebuilding of stocks, which should run its course over the coming months. That said, …
9th June 2021
The price of Pacific coal has surged to just over $100 per tonne for the first time since 2019. We think that the price will remain elevated for the rest of this year in large part owing to strong demand . Despite China’s unofficial ‘ban’ on coal imports …
25th May 2021