Insights
2024 Oil and Gas Outlook
Posted November 30th, 2023 in Articles
It’s time for our annual look at the forecast for the oil and gas industry for the upcoming year. Here is what the U.S. Energy Information Administration (EIA) and other forecasters are predicting for 2024:
The EIA Forecasts Increases Almost Across the Board
For 2024, the EIA is forecasting modest increases across all major market indicators with the exception of the retail price of gasoline. While the EIA anticipates that retail customers will pay $0.17 per gallon less at the pump on average, it is anticipating the following increases year over year:
- Brent Crude Oil – Increase to $82.57 per barrel in 2024 from $82.40 per barrel in 2023
- U.S. Crude Oil Production – Increase to 13.11 million barrels per day in 2024 from 12.93 million barrels per day in 2023
- Natural Gas Spot Price – Increase to $2.79 per million BTU in 2024 from $2.56 per million BTU in 2023
- U.S. Liquid Natural Gas (LNG) Exports – Increase to $12.36 billion cubic feet per day in 2024 from 11.81 billion cubic feet per day in 2023
The EIA’s forecasted annual averages for 2024 are below its forecasts for the beginning of the year in many instances. For example, the EIA is predicting that “the Brent crude oil spot price will increase from an average of $78 per barrel (b) in December to an average of $84/b in the first half of 2024.” Notably, in December 2023 the EIA also significantly lowered its 2024 annualized forecast from its previous forecast of $93 per barrel in November.
Fitch Ratings Anticipates Broad Stability in 2024
Fitch Ratings released its 2024 outlook on December 12, 2023. Overall, Fitch Ratings is anticipating that the oil and gas sector’s performance in the upcoming year “will remain broadly in line with that in 2023 and stronger than mid-cycle levels.” This represents a balance of factors, as the organization is expecting that a slowdown in demand growth will be offset by OPEC’s spare capacity. Heading into 2025, however, Fitch Ratings notes that prices may start to decline if this spare capacity is sold off in 2024. This is in line with forecasts from the International Energy Agency (IEA), which notes that the oil market could shift into a surplus at the start of the New Year.
Deloitte: Outside Factors Will Play an Increasingly Important Role
In its annual outlook, Deloitte predicts modest growth in 2024 similar to the EIA. However, it also notes that outside factors (i.e., the push toward electric vehicles) will continue to play an increasingly important role. This may present something of a Catch-22 for companies in the industry, as “continued financial strength of the industry is likely to raise expectations of investors, regulators, and other stakeholders, who may anticipate further progress in emissions reduction [and] augmented investments in low-carbon energies.”
Speak with an Oil and Gas Consultant at Mithras Investments
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