A pumpjack draws out oil from a well head near Calgary, Alta., Saturday, Sept. 17, 2022. Deloitte says energy prices will likely be volatile in the first quarter of 2023 as geopolitical uncertainty continues. The firm’s energy, oil and gas price forecast released Monday said tension between supply and demand will continue throughout the winter. THE CANADIAN PRESS/Jeff McIntosh

By Rosa Saba in Toronto

Energy prices will likely be volatile in the first quarter of 2023 as geopolitical uncertainty continues, Deloitte said.

Global factors including the war in Ukraine and China’s rocky COVID reopening will continue to contribute to tension between supply and demand, according to the firm’s energy, oil and gas price forecast released Monday.

“We fully expect volatility to continue,” said report author Andrew Botterill.

After breaching the US$100 mark for the first time in close to a decade earlier in 2022, crude oil prices slid in the back half of the year as interest rates rose, then rallied briefly as China started moving away from its zero-COVID policy.

Botterill said in the first quarter of 2023, China’s reopening will continue to be a key focus as many questions remain unanswered about how the shift will affect global demand and whether it could cause a supply-and-demand crunch.

Other major factors for oil prices have included OPEC-plus production cuts and moves to cap the price of Russian crude which Deloitte says could lead to disturbances in global supply, while natural gas prices have been influenced by regional weather forces and storage levels, especially in Europe.

Global demand for North American oil and natural gas will likely elevate prices and benefit Canadian energy companies, Botterill said.

He said the widening differentials between Canadian and U.S. oil prices will likely continue into 2023.

Meanwhile, for natural gas he said the big question will be how much will be exported from the U.S. and therefore how much Canadian product the U.S. needs to fulfil domestic demand.

“Canadian volumes may be needed to help feed the U.S. economy, meaning more robust prices,” he said.

Though the windfall from higher energy prices last year would normally lead companies to increase their budgets and invest in larger projects, in 2023 companies will likely be bent on shoring up balance sheets and bracing themselves for continued volatility amid continued geopolitical uncertainty and talk of recession, said Botterill.

That means companies may focus more on piloting and policy development this year before making multibillion-dollar investments in longer-term projects, said Botterill.

“They want to make sure they … don’t drive themselves into a lot of debt,” he said.

Though there’s a lot of attention on longer-term sustainable energy projects, Botterill said energy companies will approach these investments with caution, not just because of the economy but also because of uncertainty around government policies.

“We’ve seen different countries take a lot of different stances on different policies to help support decarbonization investments. But as there’s a lot of looseness around those policies and how they’re going to be, how they’re going to roll out into the sector,” he said.

“We’re going to see (producers) making really laser-focused investments on piloting and understanding technologies and understanding the risk and then getting a little bit more policy understanding and security.”

This report by The Canadian Press was first published Jan. 9, 2023.

The Canadian Press

News from © The Canadian Press, 2022. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • 0062 TED_EPAC_Technology_30
    0062 TED_EPAC_Technology_30
  • 0061 SIMSA 2024 For Sask Buy Sask
    0061 SIMSA 2024 For Sask Buy Sask
  • 0060 Arizona Lithium Lease building
    0060 Arizona Lithium Lease building
  • 0059 Southeast College Heavy Equipment Operator
    0059 Southeast College Heavy Equipment Operator
  • 0058 Royal Helium Steveville opens anonymous rocket
    0058 Royal Helium Steveville opens anonymous rocket
  • 9002 Pipeline Online 30 sec EBEX
    9002 Pipeline Online 30 sec EBEX
  • 0055 Smart Power Be Smart with your Power office
    0055 Smart Power Be Smart with your Power office
  • 0015 Latus Viro
    0015 Latus Viro
  • 0052 Predator Inspections
    0052 Predator Inspections
  • 0051 JML Hiring Pumpjack assembly
    0051 JML Hiring Pumpjack assembly
  • 0049 Scotsburn Dental soft guitar
    0049 Scotsburn Dental soft guitar
  • 0046 City of Estevan This is Estevan
    0046 City of Estevan This is Estevan
  • 0041 DEEP Since 2018 now we are going to build
    0041 DEEP Since 2018 now we are going to build
  • 0032 IWS Summer hiring rock trailer music
  • 0022 Grimes winter hiring
  • 0021 OSY Rentals S8 Promo
  • 0018 IWS Hiring Royal Summer
  • 0013 Panther Drilling PO ad 03 top drive rigs
  • 0011
  • 0006 JK Junior
  • 9001
  • 0002

 

Brian Crossman: Time to pull out the Magic Eight Ball and make some 2023 predictions