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09/14/2021 | News release | Distributed by Public on 09/14/2021 03:45

IEA keeps cool on demand after Opec's hike

The IEA has kept its global oil demand growth forecast little changed from August, a day after Opec hiked its 2022 growth projection by almost 1mn b/d.

The IEA said in its latest Oil Market Report (OMR) today that demand is set to increase by 5.2mn b/d in 2021 and 3.2mn b/d next year, taking the 2022 average consumption to 99.4mn b/d.

Opec's Monthly Oil Market Report (MOMR) released yesterday sees oil demand averaging 100.83mn b/d next year, up by 4.15mn b/d from 2021 which was a sharp acceleration from the 3.28mn b/d growth projection it made last month. Opec explained the change by a stronger pace of demand recovery and a 'steady' economic outlook in all regions.

'Demand growth in China and elsewhere in Asia is under pressure from resurgent Covid cases,' the IEA said. 'We have revised down our world oil demand forecast for August and September by nearly 600,000 b/d as China and a number of other southeast Asian countries enforce more mobility restrictions.'

'Strong pent-up demand and continued progress in vaccination programmes should underpin a robust rebound from the fourth quarter of 2021,' the Paris-based energy watchdog said.

Global oil supply declined by 540,000 b/d to 96.1mn b/d in August from July and is likely to stay steady in September as unplanned outages offset increases from Opec+, the IEA said.

'Hurricane Ida shut in 1.7mn b/d of oil production along the US Gulf Coast at end-August, with potential supply losses from the storm approaching 30mn bl,' it said.

OECD industry stocks fell by 34.4mn bl in July, standing 185.7mn bl lower than the 2016-2020 average and 120.3mn bl below the pre-Covid five-year average, the report said.

'Preliminary data for the US, Europe and Japan show industry stocks decreased by a further 31.1mn bl while crude oil held in short-term floating storage decreased by 20.3mn bl to 101.7mn bl in August,' the IEA said.

'With nearly 900,000 b/d of crude output and 700,000 b/d of refinery capacity offline at the time of writing, hefty draws are expected to continue through September,' it said. 'An uptrend in supply should resume in October as Opec+ continues to unwind cuts, outages are resolved and as other producers increase.'

'Even so, it is only by early 2022 that supply will be high enough to allow oil stocks to be replenished. In the meantime, strategic oil stocks from the US and China may go some way to help plug the gap,' the report said.

By Konstantin Rozhnov