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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (66397)	10/3/2025 10:19:54 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68729

Grok: A recent report indicated that there may be a glut of excess oil and gas capacity in the intermediate and long term that will depress the price of oil and gas, especially in North America. Is this true? Provide a chain of thought. Answer: \ To evaluate the claim of a recent report indicating a glut of excess oil and gas capacity in the intermediate (2-5 years) and long term (5+ years) that will depress prices, especially in North America, I followed these steps: Step 1: Identifying Recent Reports I searched for recent (2025) reports on oil and gas gluts/excess capacity. Key sources emerged: For oil: The International Energy Agency's (IEA) Oil Market Report - September 2025, which explicitly forecasts a "massive" global oil surplus. For gas: Multiple reports on LNG capacity, including OilPrice.com (Sep 23, 2025) on U.S. LNG glut risks by 2030, Pipeline & Gas Journal (Sep 22, 2025) on global LNG oversupply, and LSEG estimates cited across sources. These align with the "recent report" description, focusing on North American (U.S.) contributions to global supply growth. Step 2: Assessing Excess Capacity Projections Oil: The IEA projects global oil supply growth of 2.7 million barrels per day (mb/d) in 2025 (to 105.8 mb/d) and 2.1 mb/d in 2026 (to 107.9 mb/d), driven by non-OPEC+ producers (including U.S. shale) and OPEC+ unwinding cuts. This creates a surplus of ~1.8 mb/d in 2025, ballooning to >3 mb/d in 2026— the largest on record, exceeding pandemic-era builds. North America, as the top producer, contributes significantly via U.S. shale/tight oil output. Gas/LNG: Global LNG capacity surges 60% from 550 billion cubic meters (bcm) in 2024 to 890 bcm by 2030, with U.S. projects (e.g., Cheniere expansions) adding ~150 bcm. Oversupply starts at 50 bcm in 2025-2026, reaching 200 bcm by 2030. U.S. exports drive this, but domestic production growth is tied to associated gas from shale. Intermediate-term glut (2025-2030) is evident for both; long-term (post-2030) risks persist if demand lags (e.g., slower EV adoption for oil, renewables for gas). Step 3: Evaluating Price Depression, Especially in North America Oil: Yes, the glut depresses prices globally and in North America. The IEA's supply-demand imbalance implies downward pressure, with Brent crude struggling above $65/barrel and support at low $60s. U.S. WTI follows suit, as excess capacity floods markets. Intermediate-term: Prices dip amid 2026 surplus; long-term: Sustained if OPEC+ floods further. Gas: Nuanced—global LNG prices fall due to oversupply (e.g., Asia/Europe spot prices drop), eroding exporter margins. However, in North America, U.S. Henry Hub prices are forecast to rise from $2.94/million British thermal units (MMBtu) in 2025 to $3.43/MMBtu by 2030, driven by export demand and domestic needs (e.g., AI data centers adding ~half of U.S. power growth). Long-term (to 2035), competition could push prices higher, potentially leading to export curbs. The claim holds strongly for oil but partially for gas—North American gas prices may buck the global trend due to robust demand. Step 4: Overall Verification and Context The claim is largely true, substantiated by the IEA and LNG analyses. Risks include geopolitical disruptions (e.g., Middle East tensions) or faster demand growth (e.g., from China), but current projections favor glut-driven weakness, especially for oil in North America. No major counter-reports emerged denying this. Final Assessment Yes, recent reports confirm a likely glut of excess oil and gas capacity in the intermediate and long term, depressing prices—particularly for oil across global and North American markets, with gas facing global weakness but potential U.S. price resilience.