Contradicting signals
After quite some time of silence, we hereby provide our next update with another extensive selection of relevant industry news. Due to unforeseen circumstances beyond our control, we had to suspend updating, but we are back on line and catching up.
As it is holiday-time, it seems not the right moment to go into deep analyses of the developments worldwide, but what easily can be seen is that an impending gas and LNG-glut may trigger the next wave of bad news for the gas-providers, as in several parts of the world there will be more gas becoming available than needed, causing low prices, and postponement of projects.
Notwithstanding some noises about “early recovery” or “green shoots”, reality is showing that for many people in the Western part of the planet, the economic crisis is just starting or has not started yet, but will develop its full effects only in some time. Especially in the US, where millions of people are waiting foreclosures and un-employment-benefits for many will run out next year, the delayed effects will have substantial effect on the whole economy (it being for 70 % dependant on consumption), and further downward revisions of oil & gas demand may be expected.
As Europe may follow, albeit less heavily, the combined effect of the slowing down of many OECD/ “developed” economies, may further push down global demand, even whilst in Asia demand is growing. Generally we can expect therefore, related to supply and demand, prices to stay relatively modest.
How the prices will develop for real, will mainly depend upon “other” factors, such as “market-interferences”, geo-political happenings or “hype-ups”.
It will be a delicate dance between what is needed for future production and benefits, prices needed for substantive returns, security of profitability for new projects within an environment of currently decreasing demand but also, somewhat later, declining supply.
It will be very interesting to see what is going to happen the coming months.
Stay tuned,
Alexander
