The Top 8 Unknowns In 2018’s Energy Markets
It’s that time of year when we flip our calendars to a new start.
For pundits like me, it’s customary to make a listicle about the year to come – the usual predictions about things like OPEC, energy consumption, commodity prices and electric vehicle sales in China. But I decided to fold from that no-win game a while back.
In this age of disruption, there are too many unknowns to honestly predict what will happen next week, let alone 52 of them into the future. So instead of predicting outcomes, I’ve decided to list the top eight unknowns in energy markets for 2018
- Collateral disruption– Bringing on energy projects needs a lot of investment. The shakeup of capital markets is inflicting opaque, collateral disruption to the energy business too. Financial technologies are altering fund flows, market liquidity and access to capital. You thought self-driving cars were the only thing that could affect the oil business? How about robo-trading in debt and equity markets? Energy executives now need to be ‘fintech’ experts too.
- Bitcoin after-effects– Crypto-currencies like Bitcoin have seemingly little to do with energy, other than using absurd amounts of electricity. But the underlying blockchain technology will be transformative to financing, supplying and consuming primary energy resources. Bitcoin-mania is legitimizing and accelerating blockchain transaction platforms. Be prepared: Yet-to-be-understood changes to the energy business are coming faster than most people think.
- Cartel discipline– Some have suggested that North American oil companies should join the OPEC cartel. There is no need. Western investors joined OPEC in the second half of 2017 by restricting equity capital to oil producers. A new “show me your returns, not your production growth” mantra is restraining oil company spending, and therefore the US rig count. But will it be enough to reign in oil output in 2018? And which will crack first when a barrel of WTI oil hits $US 60/B: Investor discipline or OPEC discipline?
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