IEA Agrees Near Term Demand is Strong

CRUDE OIL

IEA Agrees Near Term Demand is Strong

Crude Oil prices have recovered a bit overnight in the wake of reports from the IEA that suggested the world oil market may be tighter than it appears. The group expects global supply to rise by 2.1 million barrels per day this year, up 300,000 bpd from the previous forecast. World demand will rise by just 700,000 bpd, it said, implying a large surplus. But, they added that refinery processing rates to meet summer travel and power-generation demand are tightening the market and that the supply hike from OPEC+ had not had much effect. This is similar to comments from OPEC earlier this week. Saudi Arabia’s crude oil exports to China could reached 1.65 million barrels per day in August, their highest level since April 2023, according to sources interviewed by Reuters.

NATURAL GAS

The 6-10 day forecast shows an increased area of below normal temperatures across the mid-section of the lower 48 US states, with above normal confined to the PNW and New England to Appalachia to southeast Texas. None of this is pointing to an extended period of hot weather that would drive US cooling demand Yesterday’s EIA storage report showed a net injection of 55 bcf last week, which was below the average expectation calling for +58 bcf but above the average for this week at +49. This marks a return to the pattern of above average increases that has dominated since the build season began in March. Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.7 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June. The average amount of gas flowing to the eight big US LNG export plants rose to 15.6 bcfd so far in July as scheduled maintenance concluded. This is up from 14.3 bcfd in June and 15.0 bcfd in May. Europe and Britain temperatures are forecast to remain above normal for the next couple of weeks, which could support US LNG export demand.

PRODUCTS

This week’s EIA stocks report showed US distillate inventories were the lowest since April 2005. Reuters reports that electric-powered heavy trucks are rapidly gaining market share in China, driven by subsidies and the quick rollout of chargers, further curbing diesel usage and denting oil demand.

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