IEA called global oil demand “fragile” amid signs of a slowing economy. “The situation is becoming even more uncertain: the U.S.-China trade dispute remains unresolved and in September new tariffs are due to be imposed,” the Paris-based agency said in its monthly report. “The outlook is fragile with a greater likelihood of a downward revision than an upward one.” While Saudi Arabia’s promise to keep oil exports below 7 million bpd has given oil prices a boost, sentiment remains undeniably bearish.
IEA cuts oil demand growth forecast again. The IEA’s latest Oil Market Report shows some worrying numbers on oil demand. Consumption declined in May by 160,000 bpd year-on-year. Between January and May, demand was only up by 520,000 bpd, the weakest increase since 2008. Overall, the agency cut global demand growth for 2019 to 1.1 mb/d. The data offers further evidence of an economic slowdown.
OPEC eyes deeper cuts. Reports suggest that Saudi Arabia called other producers to explore deeper action in response to sliding prices. The report alone helped spark a rebound in prices. The Oil Kingdom also announced that it would keep oil exports below 7 million bpd.
New Permian pipelines bring relief. Permian oil producers could see not only expanded midstream capacity, but also lower fees as new pipelines bring competition. As much as 1.6 mb/d of capacity is coming online in the next few months, with another 900,000 bpd set to be operational before the end of the year. The midstream bottleneck will quickly transform into a surplus. “There’s no way another 2.5 million bpd are waiting to get sent to Corpus Christi (Texas),” Sandy Fielden, an analyst at Morningstar, told Reuters. “Clearly, there’s going to be too much capacity … There will be buying up of barrels in Midland like it’s going out of style.”
U.S. natural gas demand at record high, but prices fall. Demand for natural gas in the U.S. continues to climb to record highs, but prices keep falling. The reason is that production continues to climb. Spot prices at the Henry Hub NG-W-HH-SNL benchmark in Louisiana were nearing a 20-year low, according to Reuters. “All the bulls are gone,” Kyle Cooper, consultant at ION Energy in Houston, told Reuters.