How Do Energy Stocks Look for 2021?
How Do Energy Stocks Look for 2021?

Projecting energy market trends can be complex. It’s never easy, but now the coronavirus has made the future of all energy types even more challenging to predict.

For example, who would have ever imagined that oil price would fall to minus $37.63 a barrel in April of 2020? Thankfully, the oil price has since bounced back, but it is still difficult to predict what will happen to oil prices or energy stocks in general in the future.

Both renewables and fossil fuels face challenges with production, installation, and future projections, and these are challenges the industry has never seen before.

Even so, we have compiled a list of the top renewable and nonrenewable energy trends to watch for this year.

Hydrogen Energy May Expand

Green hydrogen is believed to reduce global CO2 emissions. An electrolysis process happens to produce hydrogen. This electrolysis also uses green energy products, so we may see the industry grow. Green hydrogen could become a renewable energy source that will play a more significant role in energy production and become more competitive in the market.

Renewables Will Return

Renewable energy companies with projects that were postponed because of the pandemic will expand again. We expect their levels to be as high as they were in 2019, and new installations are expected to begin this year. So the industry may see a full recovery by 2022.

Biofuel for Transport Companies

The world’s biofuel market has also been affected because of the pandemic. Still, the need for transport fuel is ever-increasing. With the decrease in demand for gasoline and diesel, biofuel may be the industry to watch for the future.

Electric Power Generation

Investors believe that electric power generation will decline by 1% this year. This decline is due to the uncertainty of the economic situation. Plus, unknown factors caused by the pandemic and the lower economic levels have caused an unknown prognosis for the future electricity demand.

In addition, parts supplies and workforce issues may affect new electric generators in the United States.

Slower Oil Production

The lockdowns and reduced workforce needs have caused the slowdown in the oil industry. This issue translates into future demand uncertainties in an industry that was already experiencing slowdowns in pre-pandemic years.

We may see a rise in production toward the end of 2021 which may mean the industry experiences growth. According to the Environmental Impact Assessment (EIA) projections, the United States will again need to import crude oil.

So, if someone were to ask us today for the 5-year VAL stock forecast we would have to say we are unsure, simply because we don’t know what the long-term implications of COVID-19 will be on the economy.

Liquefied Natural Gas

Here is another energy product expected to rise to pre-pandemic levels by the end of this year. However, investors should look for long-lasting market effects that could lower LNG exports. For example, lower global demand caused by lockdown measures and poor pricing may reduce LNG exports. This problem will mainly be in the industrial sector, sensitive to market conditions and economic downturns.

Coal

Coal production continues on a downward swing due to reduced demand. Many producers have closed mines permanently due to losses they incurred pre-pandemic and the reduced need for coal. Despite this news, the EIA expects coal consumption to go up slightly by the end of the year due to economic recovery needs. Again, U.S coal prices are linked to natural gas. So if the natural gas price goes up, so will coal prices.

Long Term Predictions

While the pandemic has negatively affected all energy sectors as it has other industries, the energy sector is expected to grow substantially over the next 20 years.

Developing countries will have growth factors that will give them better access to energy sources. This higher standard of living will create a 20% rise in energy demands by 2040.

Electricity Demand Will Also Rise

Finance experts expect to see a higher global electricity demand as well. They estimate this growth rate will be about 60% over the next 20 years. In addition, as a result of natural gas, solar and wind energy will also grow to help meet the global demand.

New Green Energy Projects

We can expect to see companies like ExxonMobil embracing green or energies and new technologies. ExxonMobil is already working at developing products that will lower the CO2 emissions in the environment.

Key Takeaways

The economic turndown experienced by the pandemic will take some time to reverse. Even so, we can expect to see greater energy use and the creation of products to minimize CO2 emissions.