Dear Investors,
Barclays – (8 Innovative Building Insights) Building cities for the future
“By 2050, the cities of the world are expected to be home to more than two-thirds of the world’s population and produce 85% of global economic output.”
“Although they occupy around only 2% of total land, cities are responsible for over 60% of energy consumption, 70% of greenhouse gas emissions and 70% of global waste.”
Global population to reach 9.7 billion
“With continued population growth (the UN expects the global population to reach 9.7 billion by the middle of the century).”
“Regarding rapid urbanization (by one estimate, the planet will add floor space the size of New York City every month until 2060), the resource-intensity of cities is only likely to increase.”
“According to a 2018 report, by 2050, cities are expected to consume 90 billion tons of raw materials, such as sand, gravel, iron ore, coal and wood every year.”
Cutting emissions and boosting efficiencies
“The World Economic Forum estimates that using digital twin technology in the design of a virtual power plant for example, can reduce CO2 emissions by 630 tons per year.”
“It also creates a significant opportunity for the construction industry to address its productivity problem.”
“By using data to predict when issues will arise, it may be possible to tackle them before they occur, or when they are still small, thereby potentially preventing downtime and reducing costs.”
Moody’s Analytics – (16 Impressive Energy Highlights) Energy Outlook
“Oil prices have risen $12 per barrel over the last month and $20 over the past three months.”
“West Texas Intermediate crude oil was trading above $92 per barrel on Thursday, and Brent was above $96. The resurgence in crude oil prices has been driven by production cuts from OPEC+. Investor sentiment is also pushing oil prices higher.”
“Seared by painful experiences in 2015 and 2020, U.S. producers remain reluctant to significantly invest in new wells.”
Russia’s high-water mark
“Weaker Russian oil exports are buoying prices.”
“Russia had skillfully navigated severe sanctions on its oil industry up to May, three months after the EU banned Russian diesel imports and five months after the EU banned crude oil purchases.”
“Simultaneously, Chinese oil demand is restrained by weaker foreign export markets and capital shortfalls among domestic property developers.”
“The International Energy Agency has revised its estimate of Chinese demand lower over the past six quarters, and we expect even slower growth.”
“A gangbusters Chinese economy would have made it easier for Russia to retain its export volumes.”
Saudi Arabia production cut
“We expect Saudi Arabia’s voluntary production cut to continue through 2023 and be unwound only gradually in 2024.”
“While the West continues to emphasize environmental, social and governance measures and electric vehicle production, Saudi Arabia is prioritizing price over market share.”
“Saudi Arabia’s share of global oil production has fallen from 12.3% in 2018 to 10.7% as of August.”
“The cut has brought Saudi Arabia’s level of oil production close to its lowest point in the past decade; the only time it was lower was when pandemic lockdowns collapsed transportation demand.”
Outlook
“Our expected rise in oil prices has already materialized, and investors have pushed too far.”
“We expect oil prices to retreat, with WTI averaging $81.38 per barrel in 2024. Higher prices will enable new sources of production to come on line in the Americas.”
“We expect OPEC+ to maintain its cuts throughout 2024, but we expect Saudi Arabia to end its excess 1-million bpd cut.”
“Prices are now well above the level needed to balance Saudi Arabia’s budget.”