Slowing global oil demand growth combined with surging oil supplies will lead to an inventory build of more than 800,000 b/d in 2024, the IEA said today.
In its monthly Oil Market Report (OMR), the IEA upgraded its global oil supply growth forecast by 250,000 b/d to 1.7mn b/d for 2024, despite weather-related output losses of around 900,000 b/d in North America in January.
The Paris-based agency now sees an inventory build of around 240,000 b/d in the first quarter of this year, a period when the Opec+ alliance is implementing new production cuts. In its OMR last month, IEA balances implied a slight supply surplus of 80,000 b/d in the first quarter. For the year, the IEA sees an inventory build of 820,000 b/d, compared with a forecast for 540,000 b/d in last month's OMR. Its latest estimates show the market in a surplus for 2022, 2023 and 2024.
The forecast will make for difficult reading for Opec+, whose latest production cuts were aimed at erasing any market surplus in the first quarter. The IEA said the strength of oil supply growth "could leave Opec+ pumping above requirements for its crude oil if extra voluntary cuts are unwound in the second quarter."
On demand, the IEA nudged down its 2024 growth forecast by 20,000 b/d to 1.22mn b/d. It said a deceleration in oil demand growth that began at the end last year would gather pace in 2024 because of a "harsher global macroeconomic climate" and higher oil prices. The IEA said the growth in demand would be dominated by China, India and Brazil. Between them these three are set to account for 78pc of this year's growth, which will boost demand to a record 103mn b/d.
The IEA's demand growth forecast remains substantially lower than that of Opec, which anticipates an increase of 2.25mn b/d to 104.4mn b/d in 2024.
Global observed oil stocks fell by around 60mn bl January and on-land inventories dropped to their lowest since at least 2016, according to preliminary data, the IEA said. But "given heightened geopolitical risks and low global oil inventories, a modest [supply] surplus may help contain market volatility."
