S&P Global Commodity insights unveils in-depth 2024 energy outlook

S&P Global Commodity Insights, has laid bare the intricate landscape of the 2024 energy market. According to S&P Global, against the backdrop of a turbulent global stage, characterized by economic deceleration and geopolitical uncertainties, the analysts provide insights into the delicate equilibrium between energy supply and demand.

The oil market, having weathered an extended period of heightened crude prices, finds itself at a crossroads. 

Investment and activity outside the Organization of the Petroleum Exporting Countries (OPEC+) alliance, notably in the United States, have propelled production growth to unprecedented levels, challenging the prospects of supply cuts within OPEC+.

Kurt Barrow, Head of Oil Markets at S&P Global Commodity Insights, underscores the delicate balance, stating, "Strong non-OPEC+ supply growth and slowing oil demand growth have led OPEC and its allies to curtail output and support prices. 

While this tactic has achieved some success, maintaining discipline among member countries may be difficult in 2024 as the loss of market share continues and non-OPEC+ volumes increase. 

OPEC+'s ability to follow through on voluntary production cuts will be key to crude pricing over the next year.

"While global gas markets adapt to diminished Russian gas supply, especially to Europe, constraints persist due to elevated prices and a macroeconomic slowdown.

Philippe Frangules, Head of Gas, Power and Climate Solutions, anticipates challenges, stating, "Looking ahead, gas consumers in Europe and Asia remain exposed to shortages if winter weather proves to be cold, and liquefied natural gas (LNG) logistics will be key to meeting regional demand. 

Similarly, coal producers are faced with rightsizing their output and flow this year, as pockets of demand strength remain in developing countries even if global demand is past its peak. 

Prices for both gas and coal should ease in 2024 barring unforeseen events. Meanwhile, after robust growth in 2023 propelled by underperforming hydro generation in China, global coal demand faces a prospect of slower growth or decline in 2024.

Elevated attention and investment in the energy transition mark the past year, with developers seizing unprecedented financial incentives. 

Clean technology, a linchpin in this transition, experiences growing pains such as supply chain constraints and higher capital expenditure estimates.

Simon Thorne, Climate and Energy Transformation Lead, emphasizes the evolving landscape, noting"While the security of oil and gas supply will remain paramount to many countries, the world is focusing more and more on securing source materials for clean energy technology, battery metals, and renewables.

S&P Global Commodity Insights outlines ten pivotal themes influencing the energy landscape in 2024, ranging from the elusive search for a new normal in energy demand to the geopolitical intricacies reshaping the global energy and climate dynamics. 

The report navigates through uncertainties, including the economic challenges faced by central banks, the impact of China's economic slowdown, and the complexities surrounding the recovery of European power and gas demand.

A surge in electric vehicle sales is forecasted, with projections indicating that one in five cars sold in 2024 will be electric, signalling a pivotal moment for global gasoline demand. The report highlights the massive growth in North American oil and natural gas supply, driven by strong oil prices. 

Additionally, a new wave of consolidation is anticipated, both in clean technology and fossil fuels, reshaping industry landscapes.

The report sheds light on the significance of 2024 as a make-or-break year for hydrogen. 

Despite bullish projections and substantial announced low-carbon hydrogen production capacity, the industry faces challenges such as sizable cost increases and complexities in project construction.

Surpluses in critical metals, crucial for electrification and battery technologies, are on the horizon, albeit with expectations that 2024 might be the last year of 'low' prices before tightness reemerges.

The geopolitical arena is undergoing a new phase, marked by shifts in energy leverage and climate diplomacy. 

Elections worldwide, with a staggering 78 scheduled in 2024, including over half choosing a new president, introduce an unprecedented concentration of political risk.

The outcomes could reshape international relations, with a keen eye on the potential impacts of a change in leadership in the US and developments in Europe, India, Indonesia, Mexico, and South Africa.

Dan Klein, Head of Energy Pathways at S&P Global Commodity Insights, sums up the report's essence, noting, "The still young decade has seen more than its fair share of black swan events, from the COVID pandemic to wars in Ukraine and now Gaza. Even if such chaotic events fail to emerge over the next 12 months, volatility will remain high as most energy markets have not yet been able to adapt to previous swings in supply and demand fundamentals to find a new normal."