How will the price and supply of crude oil and natural gas change over the coming months?

Crude oil and natural gas is a multi-million dollar industry with a long history. The first known oil wells was in China and dates as far back as 347 AD, but the day before Christmas in 1969 is what most of us Norwegians associate with oil. The discovery of oil and the establishment of the oil fund had, and still has, a substantial effect on Norwegian welfare, with the fund reaching an all-time high this year with a value of 13 billion NOK. Most Norwegians believe that the oil made Norway rich alone, but there are more factors involved; First, Norway was already a wealthy country. Secondly, it would never generate such a profit without international events increasing the price of these commodities.


In this blog, we will highlight this relationship with recent events, news and market developments. We won’t focus on Norway alone but rather the world as a whole.


The two current most relevant events affecting the commodity market are the reopening of China and the western sanctions on Russia as a response to the war in Ukraine. Europe has, among other sanctions, banned products made from Russian crude oil. This will reduce the supply, while China, being the biggest importer of oil and gas, will increase the demand. According to basic economic theory, this will increase the price of oil and gas.


The International Energy Agency released on Wednesday their estimates for the global oil demand growth. They predict a record-high demand and claim that China will account for nearly half the projected increase in global demand, increased air traffic and need for jet fuel is a concrete indicator.


The gas market is experiencing a fall in prices due to milder weather and less need for heating. Germany as an example, the EU’s biggest gas consumer, is expected to experience temperatures 2,8°C above the norm next week and also keep a sustainable gas storage. This is the case for many countries, and unless the weather turns cold, it is currently a low risk for price spikes in the coming months. 





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