The IEA has made a substantial downwards revision to its projected oil demand deficit this year and now sees the market flipping into a surplus in 2024.
In its latest Oil Market Report (OMR) the Paris-based agency sees a deficit this year of 210,000 b/d, down from 670,000 b/d forecast in last month's OMR. For 2024, it now sees a surplus of 490,000 b/d, compared with a deficit of 160,000 b/d last month.
The change appears to be driven by a downward revision to its historical oil demand estimates, with 2022 oil demand pegged lower by 370,000 b/d compared with last month and 2023 down by 350,000 b/d.
But the agency's 2023 global oil demand growth forecast remains largely unchanged at 2.24mn b/d, just 20,000 b/d higher than last month's estimate. It left its 2024 oil demand growth forecast unchanged at 0.99mn b/d — less than half of this year's projection.
It said demand growth this year is being driven by resurgent Chinese consumption, jet fuel and petrochemical feedstocks. For 2024, it sees naphtha and LPG/ethane leading the increase, "especially in China".
The IEA sees global oil supply growth of 1.5mn b/d in 2023, unchanged from last month's report. This would boost supply to a record 101.6mn b/d this year, before a further 1.7mn b/d of supply additions in 2024. But the IEA cautioned that Saudi Arabia's and Russia's extension of their additional supply cuts until the end of 2023 would "drive a significant supply fall" through to the fourth quarter. The IEA puts the demand deficit at 1.1mn b/d in the final three months of the year, around 100,000 b/d lower than in last month's report.
The IEA put the call on Opec crude at 28.7mn b/d for 2023, down by 600,000 b/d compared with last month's report. For 2024, the agency sees the call lower at 28.4mn b/d. Opec produced 27.45mn b/d of crude last month, up by around 110,000 b/d compared with July, according to an average of its secondary sources including Argus.
The IEA said global observed oil inventories fell by 76.34mn bl to a 13-month low in August, according to early estimates. The largest falls came from oil on water, which dropped by more than 50mn bl compared with end-July levels.
