World Oil Market May Be Tighter Than It Appears, IEA Says
Despite a surplus in supply and demand balance, the International Energy Agency warns of market tightness due to rising refinery processing rates.
The world oil market may appear balanced with a surplus in supply and demand, but it is actually tighter than it seems, according to the latest report from the International Energy Agency (IEA).
The organization's analysis indicates that global supply is expected to rise by 2.1 million barrels per day this year, up 300,000 bpd from their previous forecast.
However, world demand is projected to increase by just 700,000 bpd, implying a significant surplus.Despite these projections, the IEA warns that rising refinery processing rates aimed at meeting summer travel and power-generation demand are actually tightening the market.
Furthermore, the recent supply hike announced by OPEC+ has had limited impact on the market, as tighter fundamentals are not being swayed by these increases.
The agency's monthly report also highlights that price indicators point to a physical oil market that is tighter than previously suggested.This week, ministers and executives from OPEC nations, along with Western oil majors, acknowledged that output increases have not led to higher inventories, indicating the market's desire for more oil.
Looking ahead to next year, the IEA expects demand growth to average 720,000 bpd, slightly lower than previously anticipated.
Meanwhile, supply growth is expected to rise by 1.3 million bpd, also suggesting a surplus.
The organization's analysis indicates that global supply is expected to rise by 2.1 million barrels per day this year, up 300,000 bpd from their previous forecast.
However, world demand is projected to increase by just 700,000 bpd, implying a significant surplus.Despite these projections, the IEA warns that rising refinery processing rates aimed at meeting summer travel and power-generation demand are actually tightening the market.
Furthermore, the recent supply hike announced by OPEC+ has had limited impact on the market, as tighter fundamentals are not being swayed by these increases.
The agency's monthly report also highlights that price indicators point to a physical oil market that is tighter than previously suggested.This week, ministers and executives from OPEC nations, along with Western oil majors, acknowledged that output increases have not led to higher inventories, indicating the market's desire for more oil.
Looking ahead to next year, the IEA expects demand growth to average 720,000 bpd, slightly lower than previously anticipated.
Meanwhile, supply growth is expected to rise by 1.3 million bpd, also suggesting a surplus.
