Oil market to dominate energy agenda
Global energy demand is expected to fall in the first half of next year
A new wave of disruptive technology and on-going instability in energy markets are likely to be two of the dominant trends affecting the global economy in 2016.
Two key issues were examined in panel discussions during the second day of The Euromoney Qatar Conference, which finished on Thursday
In the Energy Strategy session, speakers focused on falling demand from industrial powerhouses around the world, such as China and the BRICs, which has driven oil prices down in 2015.
With global demand expected to remain weak in the first half of next year, senior executives from leading asset managers and energy companies agreed that the disruption of the last 15 months is likely to continue.
However, the panel also noted that oil supply is continuing to fall, as less economically-viable projects are postponed and cancelled.
For example, the US rig count (the number of rigs searching for oil and gas) declined to the lowest level since 1999 in December, with 737 rigs engaged in exploration and production – less than half the 2014 level of 1,920.
Given the current dip on the supply-side, several analysts expect demand will outstrip supply as early as April 2016, leading to a recovery in oil prices.
The gas market is also likely to begin to recover in 2016, as nations around the world look to reduce emissions and introduce cleaner energy sources.
Gas demand globally has grown at a better rate than oil in recent years – averaging 2.5% – and is likely to increase as more nations look to phase out coal and other “dirty” fossil fuels.
As a result, the longer term picture is positive for nations like Qatar and other energy producers in the GCC, given their long-term investments in the sector and their status as low-cost producers.