Global oil stocks have built to their highest level in 18 months, the IEA said today, which could provide a buffer later in the year when supplies will be “nowhere close” to matching demand, says an article published on Argusmedia.
Global inventories
The IEA’s monthly Oil Market Report (OMR) said global inventories rose by 52.9mn bl in January to 7.8bn bl, the highest since September 2021.
There were big builds in OECD countries, driven by reduced demand and by European nations filling storage ahead of the complete embargo on Russian oil, with smaller increases in non-OECD nations. Preliminary indicators for February suggest a further stockbuild.
Market swings
“Building stocks today will ease tensions as the market swings into deficit during the second half of the year when China is expected to drive world oil demand to record levels,” the IEA said.
Post-Covid-19 recovery
Although it kept its forecast for global demand this year all but unchanged from its previous OMR at 102mn b/d, it said demand growth will be skewed towards the latter part of the year, driven by a rebound in air traffic and a post-Covid-19 lockdown recovery in China.
It forecasts demand to grow by 710,000 b/d in the current quarter and by 2.6mn b/d for October-December.
Russian output
The IEA said matching the implied 2mn b/d year-on-year growth this year will be a challenge given the uncertainty over Russian output.
It forecast 2023 liquids supplies at 101.6mn b/d, up by 300,000 b/d from its last forecast, “enough to meet demand in [the first half of the year] but falling short in the second half” when it sees demand at an all-time high of 103.2mn b/d.
Pre-war levels
The IEA acknowledged Russian production has remained steady near pre-war levels, and has certainly performed better than the IEA projected in the immediate aftermath of Moscow’s invasion of Ukraine, but noted a 500,000 b/d fall in its exports in February.
Crude oil cargoes
“Willing buyers in Asia, namely India and, to a lesser extent, China, have snapped up discounted crude oil cargoes. But increasing volumes on the water suggest the share of Russian oil in their import mix may be getting too big for comfort,” it said.
Russia has said it will cut production by 500,000 b/d for March, casting the move as a response to the G7 crude price cap.
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Source: Argusmedia
