Yahoo Finance Oil and gas prices to slump to 2-year lows through 2024: Deloitte Canada
Oil and gas prices are set to trade at two-year lows through 2024, according to a new forecast, giving consumers a potential break on heating and fuel costs.
Meanwhile, producers in Canada's energy patch are expected to shrug off a year of lower prices, shielding themselves with cash-heavy balance sheets.
A new report by Deloitte Canada calls for U.S. benchmark West Texas Intermediate (WTI) crude (CL=F) to average US$72 per barrel this year, thanks to a combination of growing supply and slowing demand. In October, the firm’s 2024 estimate was US$82.40.
“It’s been quite a fall, as we saw prices soften a lot through Q4,” Andrew Botterill, Deloitte Canada's national leader for oil, gas and chemicals, said in an interview with Yahoo Finance Canada. “We’re certainly looking at a more moderate 2024."
WTI climbed more than two per cent in early trading on Tuesday, reversing course after a sharp fall to start the week driven by Saudi Arabia’s price cut on exports to Asia.
Botterill sees a supply-determined year ahead. He says producers made significant investments through 2023 to bring more barrels to market in 2024, when demand is set to rise at only a moderate pace. The situation could spell savings for consumers filling their cars and heating their homes.
Gasoline prices in Canadian cities continue to trend lower. At the same time, Deloitte Canada estimates Alberta benchmark AECO natural gas prices will average $2.35, far below the $5.75 seen in 2022.
For Suncor Energy (SU.TO)(SU), Cenovus Energy (CVE.TO)(CVE), and their Canadian oil and gas major peers, Botterill expects shrinking budgets to help cushion the impact of lower prices.
“They deployed a lot of capital last year and brought volumes to the market. I think we’re going to see them be more moderate this year,” he said. “They’re very cash-rich. A lot of our Canadian producers did very well through 2023.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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