As of the January 11, 2024 market update, oil and gas prices show Brent crude at $77.08 per barrel, WTI crude at $71.65 per barrel, Natural Gas at $3.006 per million British thermal units (MMBTU), and the OPEC Basket at $78.28 per barrel. These figures represent the current state of the energy market, reflecting fluctuations influenced by factors such as global demand, geopolitical events, and supply dynamics. Investors and industry stakeholders closely monitor these prices for insights into the economic landscape and potential implications for various sectors.
Industry News
China achieved a record-breaking combined oil and gas production in 2023, surpassing 390 million metric tons of oil equivalent with an average annual growth rate of 11.7 million metric tons. This milestone was attributed to China’s strategic emphasis on maximizing output from domestic reserves to enhance energy security and reduce dependence on imports from geopolitically sensitive regions. Natural gas production reached 230 billion cubic meters, maintaining an annual growth of 10 billion cubic meters for seven consecutive years. Notably, unconventional natural gas production, including tight gas, shale gas, and coalbed methane, exceeded 96 billion cubic meters, constituting 43% of total natural gas production. The Sichuan Basin, Ordos Basin, and Tarim Basin played pivotal roles in the significant increase in natural gas production. Additionally, China’s crude oil production in 2023 reached 208 million metric tons, driven by a substantial rise in offshore crude oil and making China the global leader in onshore ultra-deep oil and gas fields exceeding 6,000 meters. Shale oil production also reached a new high, exceeding 4 million metric tons.
Nippon Steel, Japan’s leading steelmaker, remains confident in successfully completing its $14.9 billion acquisition of U.S. Steel, despite facing opposition from both U.S. senators and the United Steelworkers union. The planned deal has attracted criticism from lawmakers across party lines, with concerns expressed about its implications for national security. Nippon Steel’s President, Eiji Hashimoto, reassured reporters that the acquisition would not harm the U.S., emphasizing that their investment aligns with the economic security strategies of the United States and other Western nations. Hashimoto highlighted the advantages of Nippon Steel’s substantial investment and advanced steel-making technology for the United States, asserting the commitment to maintaining the current labor agreement as part of their approach to employee and union relations.
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The International Energy Agency (IEA) warns that the slow expansion of renewables may lead to a surge in emissions as global electricity demand is expected to rise by 5% in 2021 and an additional 4% in 2022. Although renewables are projected to grow by 8% in 2021 and 6% in 2022, the IEA cautions that this will only meet half of the increased demand. Fossil fuel-based electricity generation, covering 45% of the demand increase, and nuclear power will make up the rest. The Asia Pacific region, particularly China and India, is expected to drive most of the electricity demand growth. The rise in fossil fuel-based generation could lead to a 1% increase in gas-fired generation in 2021, a 2% increase in 2022, and a 5% increase in coal-fired electricity generation in 2021, potentially reaching an all-time high.
The global petrochemical industry faces challenges in 2024, characterized by economic uncertainty, weak operating rates, and oversupply affecting prospects for recovery. While demand shows signs of stabilization, the industry anticipates difficulties amid factors like weak economic growth, oversupply, higher inflation, interest rates, and geopolitical tensions. The outlook for the broader economy is mixed, with regional variations such as surprising strength in the U.S., China struggling to regain momentum, and the Eurozone facing a potential recession. Dow expects challenging market conditions to persist but notes indicators suggesting possible improvement in the coming year. The global ethylene market signals a supply-driven surplus until 2026, impacting petrochemicals. Plastics demand is lower than expected due to inventory restocking and weak durable goods demand. Global ethylene margins are expected to remain challenged through 2025 unless there is significant industry consolidation and rationalization. Despite the downturn, the industry continues investing in energy transition and decarbonization initiatives
Japan’s nuclear safety regulators have ordered a detailed study on the potential impact of the recent powerful earthquake on the Shika nuclear power plant. Despite initial assessments indicating the plant’s systems remained intact, the Nuclear Regulation Authority (NRA) is exercising caution due to Japan’s heightened safety concerns post-Fukushima. The 7.6 magnitude quake caused damage in the region, prompting Hokuriku Electric Power Co., the plant’s operator, to address issues like transformer damage. While Chief Cabinet Secretary Yoshimasa Hayashi reassured safety, the NRA urged a comprehensive investigation and suggested a review of emergency protocols. The Shika reactors, offline since 2011, are part of Hokuriku Electric’s plan to restart the №2 reactor by 2026, pending safety reviews influenced by the recent earthquake. Despite general support for reactor restarts, transparency and safety assurances remain critical.
In 2023, shipyards globally delivered 350 new container ships, reaching a record capacity of 2.2 million TEU and marking the fastest growth since 2011 due to limited container ship recycling. Notably, ships larger than 15,000 TEU saw a 28% increase. Predictions by Niels Rasmussen at BIMCO indicate that the 2023 record is set to be surpassed in 2024, with 478 container ships scheduled for delivery, adding 3.1 million TEU and resulting in a 10% growth in the container fleet capacity. Although recycling is expected to rise in 2024, the fleet may still grow by nearly 2.8 million TEU, exceeding 30 million TEU by end 2024. Chinese shipyards lead in delivering capacity, constituting nearly 55% of all deliveries, reinforcing China’s status as the primary location for building container ships. Despite this growth, BIMCO anticipates a slower increase in container volumes, with a 3–4% demand for ship capacity in 2024.
