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- Oil prices in 2024 were heavily influenced by Chinese demand and Middle East tensions, while US shale producers consolidated and remained cautious about production growth.
- Natural gas demand surged due to increased electricity consumption, driven by Big Tech’s AI pursuits, leading to a more optimistic outlook for the gas market.
- Nuclear energy gained traction as a reliable and emissions-free source of electricity, with a focus on small modular reactors as a potential solution to lengthy construction times.
It has been an eventful year for world energy: oil supply jump scares in the Middle East, a surge in electricity demand, and a nuclear renaissance were all among the hallmarks of 2024, along with a pickup in natural gas demand. All of these trends appear set to continue into 2025, along with increasingly severe challenges on the path of the energy transition.
In oil, 2024 was an interesting year, with OPEC and the International Energy Agency vastly differing in their forecasts about demand for the commodity that underpins the global economy. Other analysts also disagreed, leaving traders stuck between actual fundamentals and predictions based on unproved assumptions, such as the adoption rate of electric cars, which has been weakening everywhere except in China.
Speaking of demand and China, the latter was the key driver of oil prices this year. Almost every report on oil price changes featured the phrase “concern about Chinese demand” in its lede—unless it featured the latest from the Middle East, the supply-side driver of oil prices for the year. Chinese demand growth this year apparently underwhelmed, disappointing traders who expected it to continue growing at double-digit percentage figures forever.
What’s more, several stimulus packages announced by the government in Beijing did not immediately lead to a surge in oil demand, which contributed to the oil price depression. Even the latest import figures, which suggested oil imports are picking up after several weak months, did not change market sentiment, as the full-year average rate of import is set to be lower than the average for 2023.
While traders watched China for red flags in demand, the war between Israel and Hamas expanded to the point where Israel and Iran exchanged direct strikes, temporarily reigniting fears of an oil supply disruption. However, both decided not to push it eventually, and those fears dissipated, to be replaced once again by “concern about Chinese demand,” even as some analysts warned that oil demand is being mispriced due to the work of trading algorithms and that a correction was looking over the oil market.
While traders watched China for red flags in demand, the war between Israel and Hamas expanded to the point where Israel and Iran exchanged direct strikes, temporarily reigniting fears of an oil supply disruption. However, both decided not to push it eventually, and those fears dissipated, to be replaced once again by “concern about Chinese demand,” even as some analysts warned that oil demand is being mispriced due to the work of trading algorithms and that a correction was looking over the oil market.
Offering the best of both worlds, namely baseload electricity and no emissions, nuclear is drawing well deserved attention. There is, however, a problem with it, and that problem is that it takes years to build a conventional nuclear power plant. This is why small modular nuclear reactors made headlines this year as a faster alternative to those conventional plants, and they will probably continue making headlines until they are proven a viable alternative of the large facilities. For now, however, it’s conventional nuclear on the table and plans are already being drawn for gigawatts of new capacity.
By Irina Slav for Oilprice.com
The post Oil Market 2024 in Review: A Year of Surprises and Shifting Demand appeared first on Energy News Beat.
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