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Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
“We all know fucking nothing greater than anyone else does about oil costs.” So stated Ryanair’s boss Michael O’Leary in his common vibrant method on the European airline’s half-year earnings in November. Others have expressed comparable sentiments over time about how betting on the oil value is a idiot’s recreation — though minus the swear phrases. Nonetheless, Lex bravely ventured forth final in January 2024 with a prediction that the times of $100 oil costs had been over.
The logic was largely based mostly on Chinese language demand. Oil costs at $100 a barrel weren’t shocking in 2007 and 2011 given the explosive development on the time within the Chinese language economic system. However the Chinese language economic system is altering — simply take the continued robust growth in electrical car automotive gross sales, for example.
In fact, tensions within the Center East have induced oil value spikes this 12 months. Regardless of this, Brent crude costs are down about 3 per cent within the 12 months so far. Persistent issues over the power of Chinese language demand and different long-term macroeconomic components have continued to largely override short-term good points to maintain per-barrel costs caught firmly in double-digit territory.
One sector that ought to have been simpler to foretell — however proved in any other case — was the renewable power market.
The European offshore wind trade had skilled a 12 months to overlook in 2023. However Lex reckoned it couldn’t probably get any worse in 2024. Most of the issues that had stricken the sector in 2023 gave the impression to be easing, corresponding to provide chain inflation. Rates of interest have come down. Governments and US states had — after some hesitation — acknowledged that costs agreed via contracts or auctions for the ability finally produced by new wind farms must rise in the event that they needed builders to nonetheless construct.
Shares in Denmark’s Ørsted, which had a torrid finish to 2023, had even gained practically 10 per cent within the first 10 months of this 12 months.
Then got here the results of the US presidential election. That has despatched buyers in renewable power shares on each side of the Atlantic right into a tailspin as they fret over the way forward for the Inflation Discount Act. Trump additionally threatened on the marketing campaign path to scrap offshore wind initiatives on “day one” of taking workplace.
For the time being, buyers are nonetheless guessing as to what Trump can and can do. As an example, it might show troublesome to cancel the 2 US offshore wind initiatives Ørsted already has beneath approach given federal permits have already been granted, reckons Bernstein. However even diminished prospects within the US will sluggish the renewable power market’s restoration from what’s now two fairly wild years.
nathalie.thomas@ft.com
