The year 2024 is becoming a year when the prognosticators are being proven wrong. What do we mean by that? Let us count the ways.
“World Oil Demand Outpacing Expectations”
In a March 22 report from Bloomberg, we are told that the world is using more oil than ever and demand is outpacing expectations this year.
“The unabated thirst for crude contributed to an increasingly confident tone from executives at this year’s CERAWeek by S&P Global conference, the industry’s annual get together in Houston, America’s energy capital. Many attendees who spoke in interviews or on stage at the event this week said they expect consumption to rise for many years to come.
“’We should abandon the fantasy of phasing out oil and gas,’ said Amin Nasser, the chief executive officer of Saudi Aramco, the world’s largest producer. Instead, we should ‘invest in them adequately, reflecting realistic demand assumptions, as long as essential,’ he said in a speech applauded enthusiastically by attendees.
“Russell Hardy, the CEO of Vitol SA, the biggest global oil trader, told the conference his firm was pushing back the estimated peak in oil consumption to the early 2030s because of downgraded expectations on the adoption of electric vehicles.
“The International Energy Agency forecasts oil demand will rise 1.3 MMbpd in 2024. While that’s less than last year’s jump of 2.2 MMbpd, when China’s emergence from Covid restrictions juiced consumption, it’s still healthy by historical standards.
“The agency, which has had to raise its forecasts several times, now expects daily demand to average a record 103.2 MMbbl this year. It points to the strength of the U.S. economy and the extra distance sailed by ships avoiding the Suez Canal as drivers of demand.”
EIA Raises Oil Output, Price Forecasts
Some two weeks after Bloomberg’s pronouncement, Reuters, citing EIA, chimed in with a upwardly revised prediction as well.
“U.S. crude oil output is set to grow slightly more than earlier estimates for this year and next, the U.S. Energy Information Administration said, while also hiking its global and domestic oil price forecasts,” Reuters reported on April 9. “U.S. crude production will rise by around 280,000 barrels per day [bpd] this year to 13.21 million bpd, and by 510,000 bpd to 13.72 million bpd in 2025, the EIA forecast.
“It had previously estimated output to rise by 260,000 bpd this year and by 460,000 bpd next year. The agency’s view on U.S. consumption was unchanged at a 200,000-bpd increase to 20.4 million bpd in 2024.
“The increase in production forecasts was likely due to the assumption of higher prices, UBS analyst Giovanni Staunovo said.
“EIA now expects Brent crude oil prices to average $88.55 a barrel this year, up from its earlier forecast of $87, while U.S. West Texas Intermediate crude prices are now expected to average $83.78 a barrel in 2024. In March, the EIA had forecast WTI prices would average $82.15 a barrel this year.”
And So On…
The website GlobalEnergyMonitor.org, in their March 2024 e-newsletter, stated that “[In the interval] since the International Energy Agency issued a warning in 2021 that no new oil and gas fields were needed to stay within a 1.5°C scenario, oil and gas producers sanctioned a total of at least 16 billion boe across 45 projects and discovered at least 20.3 billion boe across 50 projects.
Despite this contradiction, the oil and gas industry remains steadfast in its plans to continue developing new fields, as the majority of the top producing countries anticipate increasing their production through the end of the decade.
So much for IEA. Now, maybe this last item could also be seen as an “expectation” that was “defied”:
“A More Optimistic Outlook…”
And on April 1, Macquarie also got in on the revisionist action. TheNationalNews.com, reporting that production from American oilfields reached a record high of 12.9 million barrels per day last year, remarked that Wood Mackenzie had forecast a 270,000-bpd growth in output this year. “But Macquarie analysts have adopted a more optimistic outlook on US production this year. The research firm expects U.S. supply to reach about 14 million bpd by the end of the year despite ‘industrial friction’ from acquisitions and ‘subdued’ growth forecasts from publicly listed companies.
“’The shale landscape is not bereft of potential growth drivers in 2024, amidst ongoing cost deflation and the potential for counter-cyclical efficiency gains,” Macquarie said in a research note.”
Related: 2024 Outlook: Mixed, But Promising