Market Speaks: Global Observed Oil Inventories Down By 1.2 Billion Barrels Since June 2020

13 May 2022 , 12:10 PM

The International Energy Agency (IEA) released its monthly Oil Market Report (OMR) yesterday and stated that the world oil demand growth is forecast to slow to 1.9 mb/d in 2Q22 from 4.4 mb/d in 1Q22. IEA noted that the demand growth is now projected to ease to 490 kb/d on average in the second half of the year on a more tempered economic expansion and higher prices. As summer driving escalates and jet fuel continues to recover, world oil demand is set to rise by 3.6 mb/d from April to August. For 2022, demand is expected to increase by 1.8 mb/d on average to 99.4 mb/d. Russia shut in nearly 1 mb/d in April, driving down world oil supply by 710 kb/d to 98.1 mb/d. Over time, steadily rising volumes from Middle East OPEC+ and the US along with a slowdown in demand growth is expected to fend off an acute supply deficit amid a worsening Russian supply disruption. Excluding Russia, output from the rest of the world is set to rise by 3.1 mb/d from May through December. Global refinery margins have surged to extraordinarily high levels due to depleted product inventories and constrained refinery activity. Throughputs in April fell 1.4 mb/d to 78 mb/d, the lowest since May 2021, largely driven by China. Between now and August, runs are forecast to ramp up by 4.7 mb/d, but the tightness in product markets is expected to continue based on our current oil demand outlook. Global observed oil inventories declined by a further 45 mb during March and are now a total 1.2 billion barrels lower since June 2020. In the OECD, the release of 24.7 mb of government stocks during March halted the precipitous decline in industry inventories. OECD industry stocks rose by 3 mb to 2 626 mb, but remained 299 mb below the five-year average. Preliminary data for April show OECD industry inventories increased by 5.3 mb.Powered by Commodity Insights