IEA Sees "Sizeable Surplus" In Oil Market As Demand Growth Slows
By Tsvetana Paraskova of OilPrice.com
The oil market faces a sizeable surplus next year amid ample supply and slowing demand growth, the International Energy Agency (IEA) said on Tuesday as it further lowered its demand growth estimate for 2024.
Global oil demand is set to increase by just 862,000 barrels per day (bpd) this year, amid decelerating consumption growth in China, the agency said in its closely-watched Oil Market Report today. The latest estimate is a downgrade from the 903,000 bpd growth in global oil demand expected in last month’s report.
Demand is set to grow by below 1 million bpd in 2025, the IEA said, slightly raising its estimate to 998,000 bpd from 954,000 bpd.
“Chinese oil demand is particularly weak, with consumption dropping by 500 kb/d y-o-y in August – its fourth consecutive month of declines,” the agency noted.
Meanwhile, oil supply from producers outside the OPEC+ agreement is rising and set to make robust gains of around 1.5 million bpd this year and next. The United States, Brazil, Guyana, and Canada are set to account for most of the increase, ramping up their combined production by over 1 million bpd both years, according to the IEA.
This will more than cover expected demand growth, the agency says.
In recent weeks, heightened concerns about oil supply security bump into a well-supplied market, the IEA said.
“Heightened oil supply security concerns are set against a backdrop of a global market that – as we have been highlighting for some time – looks adequately supplied,” it added in its monthly report.
Moreover, spare production capacity within OPEC+ stands at historic highs, as effective spare capacity – excluding Libya, Iran, and Russia – comfortably exceeded 5 million bpd in September, the agency said.
The IEA affirmed it is ready to act in case of supply shocks, but noted that “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.”
Yesterday, OPEC also cut its oil demand growth outlook, for a third consecutive month, due to actual consumption data so far this year and expectations of slightly lower demand in some regions, including China.