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A revival of the nuclear deal with Iran would pave the way for sanctions to be lifted, boosting the country’s oil production and weighing on prices. By contrast, while we still expect Iranian output to increase if a deal isn’t agreed, we think this would …
17th May 2021
We think that the absence of pipeline capacity constraints, a strong recovery in US oil demand, and increased output from OPEC+ members will all help to ensure that the Brent-WTI price spread remains narrow over at least the next year or so . Aside from …
5th May 2021
While we have revised down our oil price forecast for Q2 and Q3 this year in response to the OPEC+ decision to ease production cuts, we still think a rebound in global demand will help push oil prices back above $70 per barrel. We expect weaker oil demand …
8th April 2021
The recent decision by OPEC+ to increase its oil production quotas and the prospect of higher Iranian output point to a smaller global oil market deficit this year than we had previously envisaged. Nevertheless, the persistent deficit means that we still …
7th April 2021
Later this year, the European Commission is expected to provide draft details on how the EU will introduce and implement a carbon border adjustment mechanism (CBAM, often dubbed a ‘carbon border tax’) as part of its plan to tackle carbon leakage and …
26th March 2021
Despite the ongoing rise in the number of rigs actively drilling for oil, we continue to expect a lacklustre recovery in US oil production over the next couple of years . An often-overlooked aspect of the rise in the number of rigs drilling for oil in the …
24th March 2021
The deeper-than-expected production cuts by most OPEC+ member states and a revival in global demand means that the oil market is now likely to be in a bigger deficit than we had previously envisaged for much of this year. We now expect the price of Brent …
12th March 2021
Slower demand growth and an abundance of supply will limit gains in oil prices over the long term, which we think will ultimately prevent oil from featuring in the next commodity supercycle . As we recently outlined in a Commodities Watch , commodity …
4th March 2021
President Biden’s stance regarding international climate policy and the Iranian nuclear deal is very different from Donald Trump’s, but we are sceptical that he will be able to enact any significant policy change. Accordingly, we think that his foreign …
25th February 2021
Recent market moves have led us to revise up our end-2021 oil price forecast. But our story remains the same: one of resurgent demand later this year at a time of constrained supply . Having underperformed other commodity prices for much of last year, the …
12th February 2021
An often-overlooked factor supporting oil prices last year was the surge in stockpiling by China and India. But given the rebound in prices since then, and how much inventories have now risen, we expect stock-related purchases of oil in both countries to …
2nd February 2021
Higher prices and a backlog of uncompleted wells should ensure that US crude oil production edges up slowly over the next couple of years. But with many of the challenges facing the sector still lurking in the background, we remain doubtful that …
27th January 2021
We expect the prices of most energy commodities to rise in 2021, as demand revives in line with the global economic recovery. But coal prices are likely to fall back, as demand growth in major consuming regions drops back after the winter weather-related …
11th January 2021
If implemented, Saudi Arabia’s shock pledge to cut oil production by 1m bpd in February and March should offset much of the current lockdown-related weakness in global oil demand. Consequently, the market should remain in a deficit, which is why we have …
7th January 2021
One of the latest casualties of heightened China-Australia geopolitical tensions is Australian coal exports. But we think that this will have limited implications for demand and prices as, for the most part, coal should be re-directed to other countries . …
22nd December 2020
We expect the unusually large discount in natural gas prices in Europe relative to those in Asia to shrink in the year ahead as the recovery in European demand gathers pace . The price of Asia LNG (JKM) recently breached $10 per mBtu; a level not seen …
18th December 2020
The substitution of coal for natural gas in European power generation has reversed in recent months, but we doubt that this marks the start of a new trend. Instead, we think that gas-based power in Europe will become increasingly price competitive in the …
11th December 2020
We forecast that a substantial pick-up in oil demand in the second half of next year amidst a backdrop of constrained supply will push Brent oil prices to around $60 per barrel by end-2021. That said, there are clear downside risks, the most notable being …
10th December 2020
With widespread vaccination against COVID-19 now increasingly likely, we are revising up our oil demand forecasts for next year. And while OPEC+ will probably raise output a little faster in response, we still think that the oil market will remain in a …
27th November 2020
The recovery in oil demand across Emerging Asia has been highly uneven. Oil consumption in China is already back to pre-virus levels, and we think it will rise further in the year ahead. But consumption elsewhere is unlikely to return to pre-virus levels …
19th November 2020
News of a vaccine sent oil prices surging on Monday on the back of expectations that this will enable demand to recover more quickly than previously thought. But higher prices also increase the chances of a faster return of supply, particularly from …
11th November 2020
New national lockdowns in Europe have led us to revise down our oil demand forecasts for Q4. But the decline is likely to be much smaller than in Q2, not least because the economic hit will be less severe . European oil demand slumped in early 2020, as …
6th November 2020
The apparent failure of the Democratic Party to win a ‘clean sweep’ in this week’s US election means that many of the policy initiatives and spending proposals made by presidential hopeful, Joe Biden, during his campaign are likely to be – at best – …
Despite a small revival in thermal coal prices ahead of winter in the Northern Hemisphere, we doubt it will be long before they start to test historic lows again. And if, as we expect, the COVID-19 pandemic serves to accelerate the push towards …
5th November 2020
We think that energy commodities will claw back a bit of the ground that they have lost relative to industrial metals over the next two years or so, as some cyclical factors linked to COVID-19 which have weighed more heavily on the former unwind. However, …
3rd November 2020
We suspect that the rapid recovery in Asia LNG prices will run out of road in the coming months, as supply returns and LNG cargoes are potentially diverted away from Europe . Asia LNG prices plummeted earlier this year as the plunge in economic activity …
Commodity prices have largely shrugged off the conclusion of China’s Fifth Plenum and discussion of the 14 th Five-Year Plan (FYP). This is not so surprising as the main takeaway from the event is that we will have to wait until March for any detail. But …
30th October 2020
Although WTI crude oil prices have partially rebounded from their second-quarter nadir, oil production in the US has yet to recover. We suspect that low prices and producers struggling to source financing will mean that US oil output won’t recover to …
29th September 2020
Brent’s recent price drop to a two-month low shows the fragile nature of its price recovery. We think that an uneven recovery in demand, combined with the hangover of vast oil stocks accumulated in the first half of this year, will limit any price gains, …
8th September 2020
Global oil supply fell to a multi-year low in the second quarter, and recent data point to output having fallen further in the third quarter. With demand reviving, we think the oil market is now in a deficit, which – assuming there is no ‘second wave’ of …
28th August 2020
A recovery in demand at a time of constrained supply will put downward pressure on US natural gas stocks and provide a small lift to prices in 2021 . The price of US natural gas (Henry Hub) touched a multi-decade low of $1.48 per mBtu in June owing …
25th August 2020
A combination of stronger demand and higher oil prices will support the spot price of Asian LNG over the next year and a half . At the start of the year, the LNG market was already showing signs of oversupply and the virus-related hit to demand made …
20th August 2020
We think that it will take over a year for oil product consumption to recover to pre-virus levels. This in turn will limit crude oil demand for the next 18 months or so and any near-term price gains . Earlier this year, we thought that global crude oil …
11th August 2020
Weekly data for June and July point to a slight recovery in US crude oil production from May’s depressed level of 10m bpd. We expect output to remain subdued for the rest of 2020 . US crude oil production fell to 10m bpd in May, from 12m bpd in April, …
6th August 2020
In recent months, cargoes of US LNG have been cancelled in record numbers as countries around the world struggle with the virus-related economic slump. After exports surged by nearly 60% y/y in the first half of 2020, we expect their subsequent collapse …
24th July 2020
The recent launch of the European Commission’s hydrogen strategy marks a step forward in the region’s decarbonisation push in which it hopes to use ‘green’ hydrogen in place of fossil fuels. We answer five key questions about hydrogen technology and …
10th July 2020
The end of the port blockade in Libya should mean that the country’s oil production is restored, but we think that supply will be slow to return not least because of damage to facilities and weak global demand. By way of background, the dramatic loss of …
3rd July 2020
In light of the recent revision to our China economic growth forecast and our expectation that the rebound in equities has further to run, we have revisited our oil price forecasts for the year ahead. We expect that constrained OPEC+ supply will not be …
25th June 2020
Gasoline demand in the US is recovering from the coronavirus-related slump. However, we think that it will take some time before consumption fully returns to its pre-virus level . By way of background, implied US gasoline demand was around 9m bpd in 2019. …
22nd June 2020
Our new coal switching price indicator (CSPI) shows that, in the UK and the Netherlands, power generation using natural gas is much more cost-effective than coal. While this has been true for a while, it has been entrenched by the recent virus-related …
18th June 2020
The virus-related economic disruption has already dealt a huge blow to fossil fuel usage in European power generation. What’s more, we suspect that the transition towards renewables may be accelerated by post-virus policy support, which would have …
16th June 2020
As expected, OPEC+ extended its 9.7m bpd production cut for another month (until end-July) . Given that prices have rallied strongly in recent weeks, the group’s caution reflects the still-high level of uncertainty surrounding prospects for oil demand. …
8th June 2020
OPEC+ is expected to meet in the next few days. Despite reports of rifts amongst its members, we think that it will agree to extend its current 9.7m bpd production cut for at least another month . At the latest meeting in April, OPEC and its allies …
5th June 2020
Coal prices should receive their usual seasonal uplift later this year. Nevertheless, we think that the average price of Newcastle coal will fall in 2020 and 2021 owing to weak demand and strong supply . The price of Newcastle (Pacific) coal has plummeted …
3rd June 2020
Quarantine measures associated with COVID-19 have seen geopolitical disputes, such as US-Iran tensions, seemingly fall under the radar of energy traders. That said, the national security law imposed on Hong Kong by China could re-escalate US-China trade …
28th May 2020
In recent weeks, all three major natural gas benchmarks have traded at more-or-less the same price. Rather than a structural shift in the market, we think this probably reflects regional prices simply collapsing in unison amid the virus-related collapse …
18th May 2020
Low oil prices, OPEC+ production cuts and delays to investment should reduce global oil supply by over 6% this year. This is one reason why we expect prices to end the year higher . By way of background, global oil production rose to 100.5m bpd in 2019 …
11th May 2020
Next week, the Texas Railroad Commission could mandate measures to curb oil production in Texas for the first time since the 1970s. However, even if they do decide to curtail output, we think that the impact on oil prices will be minimal, in part because …
30th April 2020
OPEC’s allies recently agreed to cut output from May. While compliance with quotas is usually sub-par, we think that adherence to the quotas will be greater this time, in part because oil prices are so low . Earlier this month, OPEC+ agreed to cut oil …
24th April 2020
The spot price of WTI turned negative yesterday in large part owing to the nature of trading in the futures market. That said, the price slump has some fundamental underpinning as demand is very weak. We expect that storage constraints will keep the price …
21st April 2020