We have really seen the oil prices trade sideways, despite the fact that we saw
OPEC plus announcing the surprise production cut.
So what will be driving prices in the next few months?
Thank you, Cheri. So since all packed class analysis
production cuts earlier this month, oil prices have indeed ease slightly due to
global IBEX is stuck. And that's pretty normal given that we
are in a demand low season when people don't typically travel that much.
I'll highlight two key drivers of oil prices in the months ahead, and that is
China's oil demand. And back plus now we are seeing signs
that oil demand in China is strengthening.
Road traffic levels in the largest cities are consistently higher than the
same time last year. And while jet fuel demand would only see
most of its recovery in the second half of this year at the gates and schedules
are suggesting that there's a lot of pent up air travel demand in the
country. Asia as a whole will make up for most a
large majority of the oil demand growth this year.
And so far, things are looking very positive.
Now to OPEC. Plus, I doubt production cuts will come
into effect from next month. And we expect, unlike the previous
rounds of Kodak cut, we expect most of it to translate into actual supply cuts.
And that's because this time DAX cuts are only there to get it to member
countries which are able to deliver those cuts.
And perhaps as importantly, are all back pluses showing a strong sign of unity.
They were able to discreetly organize themselves and agree on the production
cut details, which would be significant production cuts without any leaked to
the media. And so this shows that all back plus a
good exercise could have a strong resolve in keeping prices, support it in
the months ahead. All in all, we've all paid plus cuts and
China's strong strengthening demand. We expect to see the global oil market
balance fleet into a supply deficit as early as me, if not definitely by June
and remain in Europe when it every remaining one of the euro.
Right. And we've also got a new report when it
comes to oil and gas trends. Can you tell us how we've seen the high
oil price environment and how that's played out when it comes to divestments?
She also said in this report we look at the nine major IOC is mostly based in
Europe and North America. So typically in a year where prices are
low, it will be followed by higher divestments in the year after.
So there is a one year of that and vice versa.
And that's probably the same trend as Cap Ex as well.
In addition, we are seeing is that companies are divesting mind our home
countries, namely North America and Europe.
And that's because they face more regulatory pressures in those regions,
which translates into higher cost of operations.
And an interesting trend we are seeing is that all of these companies are major
aliases have 2015 net zero emissions target.
This covers got one into emissions globally and oil and gas still
channelling most of this divestment process into fossil fuel projects.
However, we are seeing a steady increase in CapEx to what's low carbon projects
annually since 2019. And we expect the gap between divestment
proceeds and energy transition investments to narrow in the coming
years so that I companies are able to meet those emissions targets.
And an interesting trend that we've came across is that companies, particularly
the European uses, are actually looking more into selling equity stakes in
renewal projects to pass the development phase.