Sunday Thematic and Weekly Recap
Surplus Energy In 2024? Short-Term Good News, Longer-Term Problems
- Natural gas prices outside the US have weakened, and oil markets would also be weaker if there were no Middle East tensions – surplus energy in 2024 would benefit the global economy but cause other eventual headaches.
- Much lower oil prices would provide the inflation relief that Western economies might need to cut rates, and this would boost confidence and spending, although with a new S&P 500 record, maybe US confidence is OK.
- The negative of an energy glut in 2024 is that it might discourage investment in all forms of energy as one of the drivers of renewable growth has been the high price of alternatives – this would set up shortages later.
- For the risk premium to come out of oil, the World would likely need to feel more secure, and if you have read our recent work, you will know that it does not feel that way with multiple global conflicts coinciding.
- Otherwise, we summarize our first monthly Agriculture report, look at inflation, highlight some reality checks for a few companies, launch our first hydrogen monthly cost monitor, and discuss the carbon footprint of food.
- Companies Mentioned: Chesapeake, Southwestern, BASF, Huntsman, PPG, Axalta, Eneos, LSB, CF, Albemarle, Plug Power
- Products Mentioned: Crude Oil, Natural Gas, LNG, Ethane, Ammonia, Methylcyclohexane, Lithium, Industrial Gas, Hydrogen
Exhibit 1: US, Asia and Europe natural gas prices fall further WoW, but Brent Crude oil values strengthen.
Source: Bloomberg, C-MACC Analysis, January 2024
See PDF below for all charts, tables and diagrams