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Informist, Tuesday, Oct. 15, 2024

 

MUMBAI – The International Energy Agency expects global oil demand to grow by just under 900,000 barrels per day in 2024, and by around 1 million barrels per day in 2025, significantly lower than the 2 million barrels per day in 2023. The slowdown in demand growth is on account of weak demand, particularly from China where consumption dropped by 500,000 barrels per day in August – the fourth consecutive month of decline, the agency said.

 

China will account for around 20% of global gains this year and next year, compared to almost 70% in 2023, the agency said.

 

On the other hand, the supply of oil from the non-Organization of Petroleum Exporting Countries is set to increase, led by the Americas, making robust gains of around 1.5 million barrels per day this year and next. The US, Brazil, Guyana and Canada are set to account for most of the increase, boosting output by over 1 million barrels per day both years, which will more than cover expected demand growth, the energy watchdog said.

 

Global oil supply plunged by 640,000 in September to 102.8 million barrels per day with Libya’s political quagmire and field maintenance work in Kazakhstan and Norway lowering output.

 

The spare production capacity of the Organization of Petroleum Exporting Countries and its allies' stands at historic highs, barring the exceptional period of the COVID-19 pandemic. Excluding Libya, Iran and Russia, effective spare capacity comfortably exceeded 5 million barrels per day in September, according to the report. 

 

Observed global oil inventories had declined by 22.3 million barrels in August, led by a 16.5 million barrels draw in crude oil stocks. The Organization for Economic Cooperation and Development industry stocks fell by 13.4 million barrels to 2.8 billion barrels, 102.7 million barrels below the five-year average. Preliminary data suggest oil stocks fell further in September. Moreover, relatively robust refining activity and OPEC+ supply cuts have underpinned a 135 million barrels draw in crude stocks since May, while product stocks built by 35 million barrels over the same period, the report said.

 

However, public stocks with the energy watchdog alone are over 1.2 billion barrels, with an additional half a billion barrels of stocks held under industry obligations. China holds a further 1.1 billion barrels of crude oil stocks, enough to cover 75 days of domestic refinery runs at current rates. For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year, the report said.

 

Prices had slumped to multi-year lows in September, driven by the prospect of an amply supplied market in 2025. However, Brent crude oil futures prices rallied $8 per barrel in early October, concerned by the escalating tensions in West Asia. Israel’s next move, and questions over whether key Iranian energy infrastructure could be targeted, supported prices. Iran's main Kharg Island export terminal that ships 1.6 million barrels per day of crude, primarily to China, is a major concern, as is the potential spillover to the strategic Strait of Hormuz waterway, the report said.

Nevertheless, the resolution of a political dispute in Libya that briefly cut its oil exports in half, kept markets steady. For now, oil exports from Iran and neighbouring countries are unaffected, but the market remains on tenterhooks, awaiting the next developments in the crisis. In addition, the above-normal US hurricane season still has six weeks to go, it said.

 

At 1842 IST, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was $70.80 per barrel, while that of Brent crude on the Intercontinental Exchange was $74.46 per barrel.  End

 

US$1 = INR 84.03

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Taniva Singha Roy

Edited by Saji George Titus

 

 

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