Here's why oil price has pushed over $80/bbl

[dan_s]

Bloomberg:

IEA Oil Market Report: Oil market will face 300,000-bpd deficit in 2024 instead of surplus if OPEC+ restrictions continue

In their monthly report the International Energy Agency (IEA) raised its Q1 forecast for oil supplies from non-OPEC countries 100,000 bpd to 102 million bpd, and lowered it 900,000 bpd to 102.9 million bpd by the end of 2024.

Starting with this report, the IEA assumes that OPEC+ countries will maintain voluntary production restrictions throughout 2024 until they announce otherwise. Additional cuts of 1.7 million bpd were announced by a number of OPEC+ countries for Q1 and then extended into Q2. Russia cut exports of oil and petroleum products in Q1 by 500,000 bpd versus May-June 2023, while a reduction of 471,000 bpd is envisaged for Q2; each month there will be a different structure for reduction in exports and production.

The IEA said that its balance sheet has moved from a surplus to a slight deficit for the year based on this, noting that the market could see some relief given that huge amounts of oil in tankers have yet to reach their final destination. Therefore, if in its last report the IEA predicted a surplus on the market of 0.8 million bpd at the end of the year, then new estimates show a deficit of 300,000 bpd.

Global oil production is expected to decrease 870,000 bpd in Q1 due to poor weather conditions, as well as new OPEC+ restrictions, the report
says.

Commercial oil reserves in February increased by 47.1 million barrels, or 1.6 million bpd, reversing a sharp 48-million barrel decline in January, the IEA said. Barrels on the water dominated gains as maritime exports hit a record high and disruptions to shipping through the Red Sea kept significant volumes of oil on the water while onshore inventories dwindled. Preliminary data for February shows tanker inventories rose by an exceptionally high 84.7 million barrels. In contrast, onshore inventories fell for the seventh month in a row.

Commercial oil reserves of OECD countries decreased 14.7 million barrels in January to 2.759 billion barrels, their lowest levels in the last 16 months. They were 108.6 million barrels below the 2019-2023 average. Preliminary data for February shows OECD inventories dropped another 24.4 million barrels in all three regions. < As we move into the high demand months for transportation fuels, OECD Petroleum Inventories could drop to under 25 Days of Demand. I've never seen them this low.

MY TAKE: IEA is still under-estimating YOY oil demand growth. There should be more of a geopolitical risk premium on the oil price. My forecasts are based on WTI averaging $80/bbl for 2024. I probably will need to raise the oil price deck. As I posted yesterday, three large banks have raised their oil price forecasts for 2H 2024. Deutsche Bank now forecasting $90 for Q4 2024.

[aja57]

“ Ever since the International Energy Agency switched from a pure-play information provider to an advocate of the energy transition, its forecasts about oil demand have shifted to increasingly reflect this advocacy.”


https://www.zerohedge.com/energy/iea-opec-divergence-oil-demand-becomes-too-big-ignore

[dan_s]

Note from Keith Kohl today: Once Again, the IEA Raises Demand Projections

This is a story that we’ve been following for a long time. If you recall, the IEA and OPEC have been in a war of headlines over future global oil demand projections.

Initially, the IEA has been bearish on demand growth this year. However, we’ve noticed that as time goes by, the IEA has been forced to revise its projections to the upside time after time.

Now, it believes that the world’s demand for crude will climb by 1.3 million barrels per day in 2024 — an upward revision of about 110,000 barrels per day. The reason for this revision is due to continued turmoil in the Red Sea, and OPEC+ maintaining its voluntary production cuts throughout the rest of the year.