Decline in oil and fall in natural gas in 2023

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[ACCI-CAVIE] In 2023, the world’s energy markets experienced a surprising dynamic: a significant drop in oil prices and a drastic fall in natural gas prices.

In 2023, the oil sector was marked by falling prices, despite fears of supply disruptions and tensions in the Middle East. North Sea Brent and US WTI both recorded declines, with prices ending the year at $77.04 and $71.65 respectively. Analysts, such as Exinity’s Han Tan, point out that the geopolitical risk premium has already been factored into prices, mitigating the impact of regional tensions.

European natural gas down sharply

The European natural gas market ended the year on an even gloomier note. The Dutch TTF futures contract fell by 4.59% to €32.095 per megawatt-hour. The fall was attributed to weaker-than-expected European demand for gas, despite the recent cold snaps. DNB analysts note that high storage levels in Europe and a warmer than normal winter have contributed to this trend.

Sector Analysis and Outlook

Oil and gas markets were influenced by a number of factors in 2023. OPEC+ reduced its production, but this was not enough to stimulate the appetite for oil. Geopolitical tensions, in particular the Hamas offensive against Israel, initially raised concerns but did not significantly disrupt supply. Disagreements within OPEC+ and the group’s loss of power also left investors sceptical.

While 2023 ended on mixed notes for the energy sector, the fluctuations in oil and natural gas prices testify to the complexity and uncertainty that now characterise the market. These trends, influenced by a range of geopolitical and economic factors, are a reminder to players in the sector of the importance of strategic intelligence and the ability to adapt to a constantly changing environment. This year serves as a reminder that when it comes to energy, yesterday’s certainties are not necessarily tomorrow’s realities.