IEA Oil Market Report - May 12

[dan_s]

Key Stats from IEA's Monthly "Oil Market Report" for May

> OECD industry stocks fell by 25 mb to 2 951 mb in March, reducing the overhang versus the 2016-2020 average to a marginal 1.7 mb. Product stocks led the draw by 31.3 mb, while crude inventories rose by 6.1 mb. The global supply and demand balance shows implied stock draws easing to 820 kb/d in 1Q21 from 2.28 mb/d in 4Q20. April data for the US, Europe and Japan show that industry stocks fell by a combined 5.8 mb in total, led by crude, NGLs and feedstocks in the US.

> Global refinery throughput in 2021 has been revised lower on demand downgrades, newly announced temporary and permanent shutdowns and in anticipation of a strong hurricane season in the US. As downward revisions mostly affected 2Q21, we maintain our forecast of a strong ramp-up in refining activity in the next four months, with refinery runs expected to peak in August. After a 7.4 mb/d decline in 2020, refinery intake is expected to increase by 4 mb/d in 2021.

MY TAKE: As I have been telling you for months, when OECD inventories go below 30 days of consumption, the price of oil will go way up. OECD inventories are now back to normal and based on IEA estimate for April are already below normal. If OECD inventories go below 28 days of supply, which is now expected to happen this summer, the price of oil could go to triple digits.

Read summary of the IEA's monthly report here: https://www.iea.org/reports/oil-market-report-may-2021