IEA sees Oil market still significantly oversupplied despite higher demand forecast – Commerzbank
|The International Energy Agency (IEA) has left its forecast for the increase in global Oil demand virtually unchanged. It expects growth of 740 thousand and 760 thousand barrels per day this year and next year respectively. However, demand momentum is expected to slow over the course of the year. The increase is taking place from a higher starting level than previously assumed, though. As a result, Oil demand this year will be 360 thousand barrels per day higher than in the previous forecast and 430 thousand barrels per day higher next year, Commerzbank's commodity analyst Carsten Fritsch notes.
IEA reports OPEC+ overproduction led by Russia, Iraq, and UAE
"As the forecast for non-OPEC supply remained unchanged, the demand for OPEC Oil for this and next year increases to 26.7 million and 26.5 million barrels per day respectively. Nevertheless, the market is facing the prospect of a considerable oversupply, as OPEC production already totalled 27.4 million barrels per day in April according to the IEA and is likely to rise further in the coming months due to the announced production increases. Assuming that OPEC+ production is not increased any further after June, the IEA expects a supply surplus of 720 thousand barrels per day this year."
"The OPEC+ countries bound by the production targets produced a good 1.2 million barrels per day more than agreed in April, with the IEA taking the agreed compensatory cuts into account. The overproduction is attributable in particular to Kazakhstan, the United Arab Emirates, Iraq and Russia. However, the Oil production of the latter three countries is significantly higher than other data providers such as OPEC or S&P Global Commodity Insights reported."
"As a result, the IEA's OPEC+ Oil production figures are significantly higher than those of OPEC and S&P Global Commodity Insights, which is also reflected in the implied market balance. If the significantly lower production figures from the OPEC monthly report and S&P Global Commodity Insights are taken into account, the Oil market would only be slightly oversupplied this year."
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