(Oil Price)– Lately, Wall Street has been warning that oil markets could soon face a surplus, putting more pressure on already depressed oil prices. To wit, Goldman Sachs has predicted that oil markets could be oversupplied by 1.9 million b/d in 2026 amid OPEC+ unwinding production cuts and production in the Americas rising. Wall Street now sees oil prices sinking to the $50s per barrel next year, further compounding a $15/barrel decline in the current year.
And now the experts are telling energy bulls to expect even more misery, with LNG markets headed for a glut in the coming years. TotalEnergies’ (NYSE:TTE) CEO Patrick Pouyanné has warned of a looming LNG supply glut in the United States, shortly after Texas-based NextDecade Corp. (NASDAQ:NEXT) announced it has made a positive final investment decision (FID) on Train 4 at its Rio Grande LNG liquefaction plant with a planned total capacity of 48 million tonnes per annum (mpta).
Pouyanné says the U.S. is building too many LNG plants, which could trigger a long-lasting glut if the projects come online as planned. Pouyanné might have a valid concern. Rio Grande’s Train 4 has LNG production capacity of ~6 mpta, bringing the plant’s total capacity under construction to 24 mpta. Meanwhile, NextDecade has revealed that Train 5 is nearing a positive FID while Trains 6-8 are currently in the development and permitting process. Project costs for Train 4 are expected to total ~$6.7 billion, financed with 40% equity and 60% debt. TotalEnergies holds a 10% stake in Rio Grande LNG.
