Oil supply rise could cool down prices: IEA

Rising oil supplies around the world could mean that "a reprieve from the oil price rally" is coming, the IEA said today.

"Preliminary data and satellite observations of stock changes in October suggest the tide might be turning," the Paris-based energy watchdog said in its latest Oil Market Report (OMR).

The world's oil supply is set to rise by 1.5mn b/d over November and December, with the US accounting for 400,000 b/d of the increase and Saudi Arabia and Russia combined for 330,000 b/d, "in line with Opec+ targets", the agency said.

Supply jumped by 1.4mn b/d to 97.7mn b/d in October from September, with the US' recovery from Hurricane Ida accounting for half the rise, the IEA said.

"We have raised our forecast for the US by 300,000 b/d for the fourth quarter of 2021 and by 200,000 b/d on average in 2022 as current prices provide a strong incentive to boost activity even as operators stick to capital discipline pledges," the OMR said. "The US is set to account for 60pc of 2022 non-Opec+ supply gains, now forecast at 1.9mn b/d. Even so, the US will not return to pre-Covid rates until the end of 2022."

The IEA said that industry oil stocks in developed economies in September were 250mn bl below the five-year average and at their lowest since the start of 2015, after falling for a fourth consecutive month to just above 2.76bn bl. Preliminary data for October shows "a marginal stock build" of 8.6mn bl, it said.

The IEA left its global oil demand growth little changed from last month's report, at 5.5mn b/d in 2021 and a further 3.4mn b/d in 2022. It said that "robust gasoline consumption" and increasing international travel are balanced by new Covid waves in Europe, weaker industrial activity and higher oil prices.

The agency expects global oil consumption to average 96.3mn b/d in 2021 and 99.7mn b/d next year.

By Konstantin Rozhnov