IEA Oil Market Report - Jan 2021

[dan_s]

The IEA Oil Market Report (OMR) is one of the world's most authoritative and timely sources of data, forecasts and analysis on the global oil market – including detailed statistics and commentary on oil supply, demand, inventories, prices and refining activity, as well as oil trade for IEA and selected non-IEA countries. < Keep in mind that the IEA is based in Paris, France and everyone that works there knows that they much believe in "Climate Change", so all of their data is slanted. They have consistently underestimated oil demand for the decades that I have be reading their month reports.

Highlights from the January 18th report

While the number of Omicron cases is surging worldwide, oil demand defied expectations in 4Q21, rising by 1.1 mb/d to 99 mb/d. In 1Q22, demand is set for a seasonal decline, exacerbated by more teleworking and less air travel. We have raised our global demand estimates by 200 kb/d for 2021 and 2022 – resulting in growth of 5.5 mb/d and 3.3 mb/d, respectively – due to softer Covid restrictions.

World oil supply in 2022 has the potential for a Saudi-driven gain of 6.2 mb/d if OPEC+ fully unwinds its cuts. Oil output from OPEC+ could rise this year by 4.4 mb/d, resulting in reduced effective spare capacity in 2H22 of 2.6 mb/d, held primarily by Saudi Arabia and the United Arab Emirates. Non-OPEC+ growth of 1.8 mb/d in 2022 will be led by the United States. < OPEC+ is already showing signs that it has much less spare production capacity that they have been telling the market.

The global refining industry ended 2021 on a high note, with both runs and margins improving. Refinery throughputs averaged 79.8 mb/d in 4Q21, up 4.6 mb/d on a year ago. In 2021, global refining capacity fell for the first time in 30 years, by 730 kb/d, as new capacity was outweight by closures. In 2022, net additions are expected to amount to 1.2 mb/d, with runs forecast to gain 3.7 mb/d.

OECD total industry stocks declined by 6.1 mb in November, as rising crude and gasoline stocks were more than offset by draws in other products. At 2 756 mb, stocks were down 354 mb on a year ago and at their lowest level in seven years. Preliminary data for December show OECD industry stocks falling by another 45 mb while volumes of oil on the water rose. < Falling OECD Petroleum inventories is the PRIMARY DRIVER of oil prices.

Crude prices struggled under demand uncertainties in December before a vigorous post-holiday rebound. North Sea Dated rose from an average $74.01/bbl last month to $87.30/bbl on 18 January, its highest level since 2014. ICE Brent backwardation doubled, reflecting tight oil stocks.