First Look: IEA says oil demand growth outlook continues to weaken
May 15, 2024
Oil is trading lower, near $77.75, after lower-than-expected inflation report
Oil prices are now down more than $9/Bbl from the recent peak in April
April CPI came out this morning, showing softer inflation for the first time in six months
In Canada, wildfires have forced portions of Fort McMurray to evacuate, threatening some oil sands production
IEA says oil demand growth outlook continues to weaken (BBG)
The IEA has released its latest oil market report, saying they believe global demand for oil will soften in 2024 amid weaker economic activity and mild weather in Europe
“Poor industrial activity and another mild winter have sapped gasoil consumption for the year, particularly in Europe, where a declining share of diesel cars in the fleet was already undercutting consumption.”
The agency lowered its fuel consumption growth forecast by 140 MBbl/d to 1.1 MMBbl/d
The outlook of the IEA is in stark contrast to that of OPEC, which sees strong demand growth in 2024, continuing the trend of disagreement between the two groups
Natural gas prices trade higher, driven by expected robust summer demand and ongoing low production
June ’24 Henry Hub is up 4.3c this morning to trade around $2.387/MMBtu
The Summer ’24 strip is up 4.3c to $2.606 and Winter ‘24/’25 strip is up 4c to $3.454
Today’s Euro Ensemble indicates mixed temperatures across the U.S., with cooler coasts and a warmer center, maintaining a pattern similar to previous forecasts and a gradual warming trend expected through late May. (Criterion)
Yesterday, Freeport LNG announced the resumption of service for all three of its processing trains (Bloomberg)
Gas flows to the facility reached 2.09 Bcf/d, the highest since November
Shale gas drillers trim production guidance in Q1 2024 announcements (S&P Global)
Chesapeake commits to a 22% reduction in gas production to 2.7 Bcf/d for the entire year of 2024, with an ongoing curtailment of 400 MMcf/d
EQT announced in March that it is temporarily withholding 1 Bcf/d of production, adjusting its volume growth guidance to just under 7% for the year due to market oversupply
Chesapeake detailed that half of its current production cutbacks are from Haynesville Shale and Marcellus Shale, with a plan to decommission a Marcellus rig in the upcoming summer
Chesapeake CEO Domenic Dell'Osso, during a May 1 earnings call, highlighted the oversupply in the natural gas market and Chesapeake's focus on discipline, operational efficiency, and free cash flow to prepare for demand recovery
Qatar says new global LNG projects will be needed after 2030 (Bloomberg)
Qatar's Energy Minister Saad Al-Kaabi expects continued growth in natural gas demand beyond 2030, emphasizing the need for new global supply projects as economies expand
Despite potential supply gluts from new projects, including Qatar's own expansion, which aims to increase LNG capacity from 77 mmty in 2024 to 126 mmty by 2027, and 142 mmty by 2030, further capacity increases may be considered
Al-Kaabi highlighted at the Qatar Economic Forum that natural gas will remain vital, serving as a reliable backup for intermittent renewable sources amidst increasing global energy requirements
The global LNG market may face a surplus around 2026, but Al-Kaabi stresses that the upcoming supply will not suffice due to the growth in economies and population
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