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Oil Falls as IEA Raises Oversupply Forecast; Gas Trades Near $3 as Cold Snap Approaches

Oil slumps as IEA warns of growing oversupply
- The WTI prompt-month contract fell $1.42 to $58.07/Bbl Tuesday morning (7:45 AM CT)
- The IEA’s latest Oil Market Report projects global crude supply to outpace demand by nearly 4 MMBbl/d next year
- The forecasted overhang is about 18% larger than last month’s estimate, reflecting OPEC+’s ongoing supply revival
- Separately, China sanctioned the US unit of Hanwha Ocean Co., a South Korean shipping major, and warned of additional retaliatory actions against the industry
- The move escalates a long-running maritime dispute with Washington, raising concerns over potential trade disruptions given that vessels carry over 80% of global commerce
US ethane exports set to climb through 2026 (EIA)
- US ethane exports are expected to rise sharply through 2026, driven by robust global demand for petrochemical feedstock, new export capacity additions, and larger specialized vessels
- China’s expanding cracker fleet, including several recently reconfigured units, continues to boost the country’s ethane imports
- In Europe, INEOS’s Project One cracker in Antwerp (Belgium) is scheduled to start up in 3Q26, adding roughly 80 MBbl/d of ethane demand capacity

Regional Market Insights

Updated regularly with the most important market moves and outlooks.

Natural gas is trading lower, with the prompt contract remaining near $3/MMbtu
- Lower-48 population-weighted temperatures are forecast to fall to 59.1 ºF over the next two weeks, from 63.6 ºF this week
  - This will result in higher gas consumption as we head toward the start of the winter heating season
- Gas production remains low, at around 104 Bcf/d, according to data from S&P
  - Maintenance on the Permian Highway Pipeline should conclude this Thursday, supporting gas production and basis prices in West Texas
Higher global LNG supply could drive demand growth (Bloomberg)
- According to ADNOC, increased LNG production could result in stronger demand growth, as global gas prices fall making it more economical for some countries to import LNG
- ADNOC’s CEO said in an interview that “When the price sensitive markets tap into the LNG market, they don’t go back because they invest in receiving terminals and the system. You create a demand.”
- The International Energy Agency shares this view, forecasting record gas demand next year, especially in price-sensitive areas in Asia, Africa, and the Middle East