The Early Stages of a Constructive Energy Cycle
By Nurit Altman (Host) with Michael Tran
Published February 2, 2022 | 13 min listen
2021 marked a stark reversal of fortunes in the energy sector, with improving supply demand fundamentals, more resilient business models, and robust oil prices bolstering energy companies and setting the stage for continued growth. Many believe these are only these early stages of a constructive energy cycle.
On this episode of The Real Pulse, Michael Tran, Managing Director, Global Energy Strategy and Digital Intelligence Strategy at RBC Capital Markets, sits down with Nurit Altman to share his views on where oil prices will go in 2022 and the implications for the Alberta real estate market.
We are in the early stages of a constructive oil market cycle. 2022 will be the first year in a decade that we are seeing demand strength alongside supply side tightness.
There is a three step process to structurally higher oil prices, including the reduction of the storage backlog that formed during the early days of pandemic, the reduction of OPEC's spare capacity from its historical high, and the call on U.S. shale production rising to protect the market from overheating. These three steps moving in sequential order is really what's providing the framework of a structurally stronger oil market.
There's an additional geopolitical risk premium that's pricing back into the market to couple with inflation and the strong oil market backdrop, all serving as tailwinds for oil prices that will remain quite strong.
Energy policy presents a potential downside risk for energy prices. We believe that the U.S. government will be looking to provide some reprieve to U.S. consumers in the form of lower oil prices ahead of the election.
Over the near term the fundamental oil framework is the strongest set up in over a decade. This very strong oil market cycle will enable Calgary and Alberta to continue to flourish over the course of the next several years.
Disclaimer
Nurit Altman
Managing Director, RBC Capital Markets Real Estate Group
Nurit Altman is a Managing Director with RBC Capital Markets Real Estate Group, and has over 16 years of experience selling commercial real estate across Canada. Nurit specializes in the sale of multi-family, retail, office and mixed-use properties across Canada. Over the course of her career, Nurit has sold over $13 billion of retail real estate. She is based in Toronto, ON and is a licensed real estate Broker with the Real Estate Counsel of Ontario.
Michael Tran
Managing Director, Energy Strategist, Global Research
Michael Tran is a Managing Director within the Global Energy Strategy Research team at RBC Capital Markets based in New York. He is responsible for views pertaining to energy markets including macro supply and demand fundamentals. He has spent nearly 15 years in the energy markets in research, sales and trading and investment banking with major banks like UBS based in London and energy trading platforms like BP based in Calgary.
Michael's energy views are frequently quoted in media outlets and he routinely appears on television networks like Bloomberg, CNN and BNN. He is a frequent advisor to both the Canadian Federal and Alberta government on issues pertaining to energy policy and budgeting. Michael is also a Non-Resident Senior Fellow at New York University’s Center for Global Affairs. He serves on the Advisory Board of Orbital Insight, a Silicon Valley based Artificial Intelligence tech company where his work lies at the intersection of Big Oil and Big Data. He also serves on the Board of the New York Energy Forum and on the Business Committee of the US Association of Energy Economists (USAEE). He graduated with distinction from the University of Alberta with a Bachelor of Commerce in Finance and Economics.
EnergyOilOutlookReal Estate
