S&P Global Platts: Energy commodities outlook is mixed

The 2020 outlook for energy markets and commodities is as mixed as ever, as analysts at S&P Global Platts presume continued high geopolitical risks to oil supply.

They see a slight recovery in oil demand driven by IMO 2020 low-sulfur bunker-fuel specification changes, which leaves oil as the bright spot for a largely bearish energy outlook.

S&P Global Analytics show global oil demand growth accelerating to 1.26 million barrels per day with growth relying on emerging economies in 2020. Jet fuel demand is also expected to rise as the 737 Max airline fleet returns to operations, the firm said.

“As the new decade begins, the first quarter may be a reprieve for an energy complex that is largely cascading towards a race to the bottom,” said Chris Midgley, head of analytics at S&P Global Platts. “For 2020, as a whole, energy prices will struggle to post any meaningful gains over 2019, and many fuels will see sizable price declines.”

The global liquefied natural gas (LNG) market will again see large volumes of supply added in 2020, mainly from the United States. With overall storage supplies at highs, the price of natural gas in general is expected to dip.

In the renewables space, electric vehicle sales and renewable installations are poised to bounce back from a sluggish 2019, analysts say. Western European markets are forecast to see growth of about 10% in 2020 in combined wind and solar generation growth. Cost declines will continue to make the technologies more cost competitive as government policy measures will incentivize growth.

Still, Greta Thunberg and the Climate Extinction rebellion will face need to face the challenge of lower energy prices that threaten to drive increased demand for energy and challenge the economies for alternative energies and transportation, added Midgley.

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