Continuing cuts in crude oil supply by OPEC+ countries coupled with record-high production in the United States and expectations of softening demand growth have combined to push global oil prices to their lowest levels in more than two years, according to the latest forecast from Deloitte Canada’s Resource Evaluation and Advisory (REA) group. Global natural gas prices also remain lower because of high storage levels and a milder-than-expected winter last year, it said.
Deloitte
“2023 was a year of volatility in oil markets largely caused by rising geopolitical tensions, but unlike previous years, these tensions did not drive up prices as would normally be the case,” said Andrew Botterill, National Oil, Gas & Chemicals leader at Deloitte Canada. “Slowing global growth demand for crude oil and increased U.S. production to compensate for much of the cuts by OPEC+ countries means prices are about where they were in late 2021.
“Given the high storage levels in North America and Europe, and with El Niño likely to result in another mild winter, we expect natural gas prices in 2024 to remain very similar to what we saw last year. It’s possible however that some cold weather late in the season in Canada, if it arrives, could keep prices from collapsing at the end of the heating season.
“Despite the weak market as we enter 2024, Canada’s chemical and oil and gas industries still have a lot of opportunities because of our abundant natural resources. Going forward, we expect to see governments using a combination of policies, regulations and incentives to try to guide investments that will accelerate Canada’s energy transition while also helping companies diversify and grab a larger share of the emerging energy supply chain.”
The Deloitte forecast said that falling prices for West Texas Intermediate (WTI) widened the differentials with Edmonton Light and Western Canadian Select (WCS) in 2023. This led to increased takeaway pressure for Canadian producers, who responded by significantly increasing crude oil by rail shipments since the summer. Much of this pressure on the U.S. pipeline system should be eased once the Trans Mountain Expansion (TMX) begins operation later this year, which in turn should bring more stability to Canadian price differentials.
“Meanwhile, natural gas prices were remarkably steady in 2023, with modest growth in production in both Canada and the United States even as demand was lower than expected. Much of this increased production was the result of associated natural gas from oil wells, particularly in the United States,” said the report.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list
About Us
Canada’s Podcast is the number one podcast in Canada for entrepreneurs and business owners. Established in 2016, the podcast network has interviewed over 600 Canadian entrepreneurs from coast-to-coast.
With hosts in each province, entrepreneurs have a local and national format to tell their stories, talk about their journey and provide inspiration for anyone starting their entrepreneurial journey and well- established founders.
The commitment to a grass roots approach has built a loyal audience on all our social channels and YouTube – 500,000+ lifetime YouTube views, 200,000 + audio downloads, 35,000 + average monthly social impressions, 10,000 + engaged social followers and 35,000 newsletter subscribers. Canada’s Podcast is proud to provide a local, national and international presence for Canadian entrepreneurs to build their brand and tell their story.
