2019 Oil and Gas Market and Chemicals Industry Outlook

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In 2018, international oil demand looks likely to have breached 100 MMbbl/d for the first time, natural gas continues to expand its share of crucial markets, and the chemicals market has seen strong earnings growth. Now, the oil and gas industry is getting in the brand-new year with increased volatility in costs and regulative overhangs in the middle of numerous new business chances. What elements will form short- and long-term trajectory? Read about the state of the market in Deloitte's 2019 Oil and Gas Industry and Chemicals Market Outlook, a take from Duane Dickson, US Oil, Gas & Chemicals leader, Deloitte LLP.

As 2018 ends, it is a good time to take stock of the recovery for the oil and gas industry, the status of the chemicals market, and their potential customers in 2019. If there is one constant in energy markets, it is change, as prices shift and companies adapt. Separately, the chemicals market has delighted in positive development and margins for the past couple of years, so we will be watching to see if signs of a slowdown emerge. Although no one can genuinely declare to know what will take place in the next 12 months, it works to attempt to comprehend how the business environment might progress.












In oil markets, the depths of the post-2014 decline appear to be behind us. Oil rates have actually recovered from the $40 2016 yearly average WTI (West Texas Intermediate) price low. It breached $50 in 2017, and through September 2018 it balanced just shy of $67, though many manufacturers in Canada and the Permian saw lower rates due to expanding differentials. This healing has actually been an outcome of various factors, consisting of sustained success of the production restraint agreement between OPEC (the Organization of the Petroleum Exporting Countries) and non-OPEC nations in force given that the beginning of 2017, less oil concerning market from challenged manufacturers, and continued strong worldwide oil demand growth estimated by the Energy Details Administration at about 1.6 million b/d in 2018. These forces together have actually brought global oil inventory levels down by more than 175 million barrels because 2016 and buoyed costs.1.

These more positive signals have actually helped United States petroleum and natural gas liquids (NGL) production take pleasure in another excellent development year, including an estimated 2 million b/d in 2018, led by the respected Permian Basin. Natural gas is a various story, as 2018 costs in the United States stayed anchored around $3, as plentiful, low-priced US supply continued to satisfy growing need in domestic and export markets.2.

In the chemicals industry, at this phase of the capital cycle, major new capability in base chemicals is expected to be commissioned now or in the near future. An area of danger might be whether this may lead to lower margins by getting ahead of demand trends. Nevertheless, the industry might well prevent anything more than a moderate slump by phasing in ramp-ups in the new capacity, selling to the North American market, which is still rather robust, and taking advantage of enhanced US port facilities to export more effectively to international markets. So, even with a possible slowing of emerging market development, and a shift to more reuse of plastics, the chemicals market in the United States looks reasonably well-shielded from considerable downside danger.