Despite assertions by Canada’s policy wanks oil is a sunset industry, the International Energy Agency (IEA) expects crude demand to climb to an all-time record this year even as Canada sets a new oil production high..In its latest Oil Market Report, the Paris-based IEA expects global oil demand to rise 1.9 million barrels per day (bpd) to a record 101.7 million bpd in 2023, with nearly half of the increase coming from China following the lifting of its COVID restrictions..Jet fuel remains the largest source of growth, up 840,000 bpd, presumably from the lifting of travel restrictions as Canadian Snowbirds flock to winter sun destinations. .Production is not expected to keep pace, however. The IEA said it sees world oil supply growth slowing to one million bpd following last year’s 4.7 million bpd gain, fuelled by the Organization of Oil Producing Countries (OPEC) two million bpd production cut in October of last year..An overall non-OPEC rise of 1.9 million bpd will be “tempered” by an OPEC+ (which includes Russia) drop of 870,000 bpd, IEA said, due to expected declines in the former Soviet Union and the effects of an EU embargo stemming from its invasion of Ukraine in February of last year. .The US ranks as the world’s leading source of supply growth — which is expected to climb more than 12 million bpd, making it the planet’s largest oil producer. Despite pipeline constraints and government environmental policies, Canada hits an annual production record for a second straight year, along with Brazil and Guyana, the report notes. Canadian oil output hit a record 4.5 million bpd in 2022 — the fifth largest in the world — with 3.7 million bpd coming from Alberta, according to the Alberta Energy Regulator (AER)..Nonetheless, the overall drop in global production growth has been exacerbated by a corresponding drop in capital spending among the world’s oil majors. On the heels of record profits in 2022, a Reuters report notes oil companies have been hoarding cash that otherwise would have gone back into the ground to increase production. The combined debt of Big Oil fell to $100 billion US, which is the lowest in 15 years and down by more than 50% from $270 billion in 2020 as companies borrowed cash to weather the global pandemic downturn..This has been exacerbated by so-called “windfall profit” taxes in the EU and especially in the UK where many are based. On January 9 London-based Shell reported a $2.4 billion windfall tax charge may prompt it to reduce spending plans in the UK North Sea. Likewise, French supermajor TotalEnergies said it expects a $2.1 billion tax hit will also prompt it to reduce its own North Sea investments..It all adds up to a recipe for higher oil prices, expected to kick in in the second half of the year. Although they won’t be as high as last year — benchmark Brent hit $130 per barrel in March, before falling below $70 in late 2022 — prominent American investment houses including JP Morgan are expecting oil prices to climb back above $100 in the second half of 2023 on the back of further Russian supply curbs stemming from the lingering war in Ukraine and future OPEC production cuts. .As a result, North American oil prices were up modestly in morning trading on Thursday. West Texas Intermediate gained almost a dollar to climb back above $80 to its highest since December. Canadian oil prices — which is priced in US dollars, but sold in Canadian — slipped on the strength of a slightly stronger Loonie. As of 11 a.m. EST Western Canadian Select was down 65 cents to $58.55 US while Syncrude Sweet, a blend of upgraded synthetic oil sands crude that typically trades at a premium to WTI, was off 65 cents to $84.30 US.
Despite assertions by Canada’s policy wanks oil is a sunset industry, the International Energy Agency (IEA) expects crude demand to climb to an all-time record this year even as Canada sets a new oil production high..In its latest Oil Market Report, the Paris-based IEA expects global oil demand to rise 1.9 million barrels per day (bpd) to a record 101.7 million bpd in 2023, with nearly half of the increase coming from China following the lifting of its COVID restrictions..Jet fuel remains the largest source of growth, up 840,000 bpd, presumably from the lifting of travel restrictions as Canadian Snowbirds flock to winter sun destinations. .Production is not expected to keep pace, however. The IEA said it sees world oil supply growth slowing to one million bpd following last year’s 4.7 million bpd gain, fuelled by the Organization of Oil Producing Countries (OPEC) two million bpd production cut in October of last year..An overall non-OPEC rise of 1.9 million bpd will be “tempered” by an OPEC+ (which includes Russia) drop of 870,000 bpd, IEA said, due to expected declines in the former Soviet Union and the effects of an EU embargo stemming from its invasion of Ukraine in February of last year. .The US ranks as the world’s leading source of supply growth — which is expected to climb more than 12 million bpd, making it the planet’s largest oil producer. Despite pipeline constraints and government environmental policies, Canada hits an annual production record for a second straight year, along with Brazil and Guyana, the report notes. Canadian oil output hit a record 4.5 million bpd in 2022 — the fifth largest in the world — with 3.7 million bpd coming from Alberta, according to the Alberta Energy Regulator (AER)..Nonetheless, the overall drop in global production growth has been exacerbated by a corresponding drop in capital spending among the world’s oil majors. On the heels of record profits in 2022, a Reuters report notes oil companies have been hoarding cash that otherwise would have gone back into the ground to increase production. The combined debt of Big Oil fell to $100 billion US, which is the lowest in 15 years and down by more than 50% from $270 billion in 2020 as companies borrowed cash to weather the global pandemic downturn..This has been exacerbated by so-called “windfall profit” taxes in the EU and especially in the UK where many are based. On January 9 London-based Shell reported a $2.4 billion windfall tax charge may prompt it to reduce spending plans in the UK North Sea. Likewise, French supermajor TotalEnergies said it expects a $2.1 billion tax hit will also prompt it to reduce its own North Sea investments..It all adds up to a recipe for higher oil prices, expected to kick in in the second half of the year. Although they won’t be as high as last year — benchmark Brent hit $130 per barrel in March, before falling below $70 in late 2022 — prominent American investment houses including JP Morgan are expecting oil prices to climb back above $100 in the second half of 2023 on the back of further Russian supply curbs stemming from the lingering war in Ukraine and future OPEC production cuts. .As a result, North American oil prices were up modestly in morning trading on Thursday. West Texas Intermediate gained almost a dollar to climb back above $80 to its highest since December. Canadian oil prices — which is priced in US dollars, but sold in Canadian — slipped on the strength of a slightly stronger Loonie. As of 11 a.m. EST Western Canadian Select was down 65 cents to $58.55 US while Syncrude Sweet, a blend of upgraded synthetic oil sands crude that typically trades at a premium to WTI, was off 65 cents to $84.30 US.
