While U.S. natural gas demand reaches all-time highs and continues to climb, global oil demand has slowed to a pace akin to that of the 2008 financial crisis.
Citing worsening political trade tensions between the United States and China, the International Energy Agency (IEA) reported global oil demand growth has been “very sluggish” in first half 2019, with a decrease of 160,000 barrels per day year-over-year in May.
According to the IEA’s oil market report, between January and May, it had risen only 520,000 barrels per day, the lowest increase since 2008 for that time frame. In addition, global oil supply seemed to stabilize in July, but fell below year-earlier levels for the first time since 2017.
IEA lowered its global growth forecasts for 2019 and 2020 by 100,000 barrels per day and 50,000 barrels per day, respectively, however the forecast said global refining throughput is expected to pick up in the second half of the year.
On the natural gas front, both demand and production have reached a record high with the help of increasingly efficient power generators and LNG terminals, according to a report by Reuters.
Supply growth continues to outpace rising consumption and prices are not falling. According to Reuters, gas production is so high that prices in the Permian basin in Texas and New Mexico, the biggest U.S. shale oil formation, have dipped into the negatives on multiple occasions this year.
“Analysts believe the natural gas market is not trading on demand fundamentals because supply growth continues to far outpace rising consumption,” according to the report. “Energy firms are pulling record amounts of oil from shale formations, and with that oil comes associated gas that needs either to be shipped or burned off.”
To read the full report, click here.
