Bloomberg Intelligence releases 2024 energy predictions

Oil prices will face 1H24 pressure, then rebound in 2H24, and US land-driller fleets can expect weak growth.

In gas, Bloomberg Intelligence sees Asia demand fuelling global LNG trade (up 3.5%), European prices easing as demand wanes amid healthy supply prospects and the M&A energy wave in the US reaching the gas-prone Marcellus and Haynesville shale plays. As part of the energy transition, global solar installations look set to achieve new highs, OEMs derive higher wind turbine margins, and European energy majors record strong renewable-capacity additions.

Global solar installations to top 500 GW for first time

Solar power will likely remain the energy sector's fastest-growing subsegment in 2024, with global installations poised to grow 20%-plus to more than 500 GW. China is positioned to keep its crown as the world's largest market, yet the US and Europe may expand faster due to strong policy support, which could help to propel consensus for sales. First Solar, Meyer Burger and Sunnova, among the fastest-growing companies in Bloomberg Intelligence’s peer group, could see sales gains exceeding 30% in 2024, according to Bloomberg Intelligence’s scenario analysis. Global solar-capacity additions expanded more than 60% in 2023, and government proposals to reduce greenhouse-gas emissions to net zero by mid-century could boost annual solar-panel demand to more than 1000 GW within a decade vs about 400 GW last year.

More OPEC exits may be on horizon as cuts get extended, deepened

The bleak outlook for oil demand and rising non-OPEC supply suggests OPEC may be forced to extend output cuts - and potentially even deepen them - through the end of 2024. This could nudge some member nations to question the value of their membership and leave OPEC, as Angola did on 21 December 2023.

European gas may crack €30 price floor in 2024 as demand falters

A sustained decline in gas-fired output, paired with a weak economic recovery in Europe, supports Bloomberg Intelligence’s view for consensus-trailing 2024 average gas prices of €25 - 35/MWh (down 30% vs 2023). Elevated storage, which could exit March above Bloomberg Intelligence’s 45% forecast, has muted supply concerns from LNG trade disruptions in the Red Sea, with prices falling 7% year to date to €30 a MWh.

LNG trade projection contingent on Asia expansion

Global LNG trade could rise about 3.5% in 2024, based on Bloomberg Intelligence’s analysis, though there may be downside risk. Trade growth is limited by muted demand, elevated prices and restricted supply, while weather remains a crucial wild card. Weak industrial gas demand and high inventories in Europe could limit import gains in the region to low-single digits. Bloomberg Intelligence expects Asia to be the primary driver of modest LNG demand expansion, led by China amid the start of new contracts.

Will Hares, Bloomberg Intelligence Senior Industry Analyst – Energy, said: “Consolidation will remain crucial to gain scale in 2024. We see bigger oil and gas operators leveraging higher equity valuations - and deploying elevated free cash flow - to buy smaller peers. What's more, natural gas-focused firms have been absent from M&A, yet we think deal activity may rise in gas-prone Marcellus and Haynesville with benchmarks well past the bottom and longer-dated strips in contango.

“Long-term energy-transition targets remain intact for European energy majors, which are led by ambitious renewable power-capacity ambitions. We think the group will increase their net installed renewable power capacity by at least 25% (or over 5 GW of their portfolios) in 2024. This is likely to remain heavily weighted to solar vs wind, particularly given the cost inflation and supply-chain constraints faced by offshore wind in the past year, which resulted in significant write downs and cancellation of US projects. We note the group's pace of energy transition broadly slowed in 2023, characterised by an increase in near- to mid-term oil and gas capital spending driving a gentler decline in hydrocarbon production.”

Read the article online at: https://www.hydrocarbonengineering.com/clean-fuels/29012024/bloomberg-intelligence-releases-2024-energy-predictions/