Oil prices should improve next year, driven by healthy demand, TotalEnergies’ chief executive Patrick Pouyanne told Bloomberg, noting that a supply response from OPEC will also likely contribute to the rebalancing of oil markets.
“Demand continues to grow,” Pouyanne said. “I trust also OPEC countries to manage the situation” in case oil prices fall too low. U.S. producers will also adjust their production to boost prices, the executive suggested.
Pouyanne’s remarks follow Brent crude falling below $60 for the first time in months, with both the international benchmark and West Texas Intermediate set for an annual decline, Bloomberg noted in its report. Prices rebounded slightly earlier today after President Trump declared a “blockade” on tankers carrying Venezuelan crude but the prevailing perception of a mounting glut and lukewarm demand continued to pressure prices, with Middle Eastern crude swinging into contango. The contango structure, however, suggests that in the future supply would tighten, with prices for contracts dated further out higher than nearer-term ones.
On natural gas, however, Pouyanne took a bearish stance, noting the new liquefaction capacity set to come on stream in two years, pushing prices lower. Bloomberg energy analysts agree, foreseeing a glut in liquefied natural gas production capacity that would push prices lower once it starts operating in the United States and Qatar, just in time for the European Union’s total ban on Russian gas imports, the report said.
Bloomebrg also noted that gas prices in Europe have fallen to the lowest in more than a year on ample supply and not too strong demand. However, the EU is still finding it hard to fill its gas storage in line with targets for peak demand season. The EU total is at 69.3% and Germany’s total is 62.65% – both levels are much lower than they should be this time of the year to ensure supply security during the coldest months.
By Irina Slav for Oilprice.com
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