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TotalEnergies warns of 2030s LNG overbuild

The WTI CMA contract for 2026 recorded its first five-handle since late May of this year
- Cal 2026 settled at $59.92 on Thursday, but was trading above the $60 mark in early Friday morning trading
- As mentioned in yesterday's First Look, there signs that the global oil market is headed to large amounts of oversupply
- In early Friday morning trading, oil prices pared what would have been the biggest weekly loss since late June as traders eye a key OPEC+ decision on supply this weekend
Oil spreads and commentary
- Broad declines in Brent and WTI on Thursday pushed market structure weaker
- WTI’s month1 – month6 spread was the weakest since 2024 yesterday
- WTI
  - M1-M6 spread -32c to +61c/Bbl; lowest since Feb ‘24
  - M1-M12 spread -55c to +56c/Bbl: lowest since May 7
- “Looking back at the past four days’ performance, it is tempting to conclude that the long-awaited glut expected to characterize the second half of the year is finally loudly knocking on the doors of our market,” PVM’s Tamas Varga said in a note (Bloomberg)

Regional Market Insights

Updated regularly with the most important market moves and outlooks.

Natural gas is trading lower, extending losses from yesterday
- Despite a sharp intraday rally after the EIA storage report showed a smaller-than-expected build, prices finished lower yesterday
- Lower-48 weather forecasts shifted warmer across all regions, with population-weighted average temperatures forecast to be above the ten-year average for the next two weeks, but still fall toward 65 ºF by mid October
TotalEnergies warns of LNG overbuild post 2030 (NGI)
- The CEO of TotalEnergies said, “I am a little worried about the buildup of more LNG post-2030,” and that “Today, it’s accelerating too quickly… I’m not sure all these projects will find offtakers and financing,”
- These comments mirror concerns from others that global LNG demand may not grow enough to match the planned supply increases at some point in the next several years
  - If a situation like this develops, it could result in reduced US LNG feedgas demand during the summer months
  - Currently, the market is not at risk of oversupply but a significant amount of global liquefaction capacity is entering service over the next several years