<article><p class="lead">The IEA has increased its global oil demand forecast for this year and next year,saying that gas-to-oil switching could add 500,000 b/d to consumption until the end of March.</p><p>But it cautioned that ongoing moves by Opec+ to ease its production cut deal could reverse the global inventory draw by the middle of next year.</p><p>In its latest <i>Oil Market Report </i>(OMR) the Paris-based energy watchdog forecasts demand to rise by 5.5mn b/d to 96.3mn b/d in 2021, and by 3.3mn b/d to 99.6mn b/d in 2022, slightly above pre-Covid levels. These are up from a respective 96.1mn b/d and 99.4mn b/d <a href="https://direct.argusmedia.com/newsandanalysis/article/2253732">in last month's report</a>.</p><p>It said the effects on its forecasts of fuel switching are tempered by a weaker economic outlook.</p><p>"The higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery," the IEA said.</p><p>Global crude supply fell by 260,000 b/d on the month in September to 96mn b/d, because of the effects of Hurricane Ida in the US and from maintenance in Canada and Norway, the IEA said. It said the return of lost US output and the ongoing easing of Opec+ production cuts will mean a sharp rise in supply this month.</p><p>The IEA expects Opec+ to pump 700,000 b/d below demand requirements during the fourth quarter. But if the group continues to unwind its cuts, it could produce 800,000 b/d and 2.1mn b/d above the call on its crude in the first and second quarters of next year, respectively, the report said. This could offset the extended period of inventory draws, which the IEA expects to continue until the end of this year,and would leave spare capacity held primarily by Saudi Arabia, the UAE, Iraq and Kuwait. </p><p>OECD industry stocks fell by 28mn bl on the month in August, to 2.82bn bl, the IEA said, 162mn bl below the pre-Covid five-year average. Preliminary September data for the US, Europe and Japan show on-land industry stocks fell by 23mn bl in September to 210mn bl below their five-year average — the lowest since March 2015.</p><p class="bylines">By Rowena Edwards</p></article>
