Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Oil prices continued to consolidate in the second quarter of 2024, with the prices of Brent crude oil and WTI crude oil falling by 2.68 per cent and 2.45 per cent, respectively, between 1 April and the end of June. Natural gas prices rose from $1.81 to $2.59 during the three months.
According to industry insiders, the decline in China’s crude oil imports, signalling a possible weakening of demand, is negative for oil market fundamentals, while poor global refining margins and forecasts of lower second-quarter earnings by oil industry giants all add to further downward pressure on oil prices.
In early April, Brent crude oil and WTI crude oil reached quarterly and semi-annual highs of $91.13 and $86.94 per barrel, respectively, driven by heightened geopolitical tensions and an expected tightening of the supply/demand balance for the rest of the year. By early May, the price of Brent crude oil had fallen by 8.48 per cent and the price of WTI crude oil by 8.98 per cent from their highs in the first half of the year.
In a May report, the International Energy Agency noted that while voluntary production cuts by OPEC+ countries had previously helped stabilise prices, global oil supply is expected to increase by 580,000 b/d in 2024 to a record 102.7 million b/d as a result of an increase of 1.4 million b/d in production by non-OPEC+ countries.
This includes Canada’s $25bn Trans Mountain (TMX) pipeline expansion, which went into commercial operation in May this year after 12 years of delays, and is expected to deliver 890,000 bpd of oil to the West Coast.
And Canada isn’t the only country increasing its oil investments. Upstream investment in the oil and gas sector is expected to more than double in 2024 from a low of $300 billion in 2020 and well above the 2015-2019 level of $425 billion, according to the International Energy Agency. More than a third of that spending will come from North America.
Brent and WTI oil prices rose to $85.06 a barrel and $81.58 a barrel in June as geopolitical conflict erupted between Israel and Iran in the Middle East. FocusEconomics forecasts that oil prices will rise slightly from June levels by the fourth quarter and by more than 20 per cent over the next two years.
Analysts believe the oil market will go into a slight deficit as OPEC+ will gradually cut production from October. Key factors to watch include the monetary policies of major central banks, the health of the Chinese economy, future OPEC+ decisions and geopolitical tensions in Eastern Europe and the Middle East.
In the longer term, the IEA expects oil demand to peak in 2030 at nearly 106 million barrels per day. After that, the market share of electric vehicles is expected to grow, while sales of internal combustion vehicles are expected to decline at a rate of 2 per cent or more per year. Fatih Birol, executive director of the IEA said demand is expected to increase by about 1 million barrels per day this year.
FocusEconomics forecasts that the spot price of Brent crude oil will be $83.53 in the fourth quarter of 2024 and around $78 in the fourth quarter of 2025, while the price of WTI crude oil will remain at $79.35 in the fourth quarter of 2024 and will operate around $74 in the fourth quarter of 2025.
Natural gas prices rose to a 2024 high of $3.11 on 11 June, the first time prices have topped $3 since November 2023, as geopolitical concerns underpinned the market. FocusEconomics noted in a report that average natural gas prices should be higher in the fourth quarter than they were in June due to seasonal heating demand. However, for all of 2024, prices should decline from 2023 levels.
Average natural gas prices are expected to be $2.99 in the fourth quarter and $3.56 in the fourth quarter of 2025 due to high existing inventories, low industrial output and strong renewable energy demand.
