International Demand

Tightening of the oil market confirmed by the revision of the request of the IEA

An energy facility on property leased to Devon Energy Production Company by the Catholic Archdiocese of Oklahoma City is seen near Guthrie, Oklahoma September 15, 2015. REUTERS/Nick Oxford

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LONDON, Feb 15 (Reuters) – An upward revision to historic oil demand by the International Energy Agency in its monthly report points to a tighter global market than the watchdog previously estimated. Western energy.

“Our balances are now more in line with observed market fundamentals, which underpin trader sentiment. We believe the tighter balance for 2021 and 2022 is already reflected in the price of oil and the futures curve.” , the IEA told Reuters.

Oil prices hit $100 a barrel in 2022 as fuel demand recovers from a pandemic crash, in a rally that has driven up energy costs around the world, forcing some companies to cut their production and to empty the pockets of consumers.

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The IEA on Friday revised up its baseline estimate of global demand by nearly 800,000 barrels per day (bpd), or just under 1% of the 100 million bpd global oil market, after reassessing demand for petrochemicals in China and Saudi Arabia since 2007.

Both countries consumed more light oil, known as natural gas liquids, which is produced in association with gas. The IEA said the revision helped explain the historical difference between observed and implied inventory changes.

Application revisions

Although the Paris-based IEA did not change its outlook on the pace of economic recovery, the rise in historical assumptions means that demand in 2021 has exceeded supply by 2.1 million bpd.

The change also indicates oil demand was roughly back to a pre-pandemic high of 100.3 million bpd in the fourth quarter, closer than previously forecast. A full rebound in demand is still expected in the third quarter of 2022.

IEA projections of global oil demand

“What the demand revision means is that some … who look to the IEA database as input for their analysis will see a tighter oil market, which will lead to a different assessment of how to position themselves. “said Giovanni Staunovo, commodities analyst at UBS.

“Emerging markets account for more than 50% of oil demand, where data is less transparent and their demand continues to grow faster than in OECD countries. Unsurprisingly, all energy agencies have different numbers,” he added.


The gold standard in energy market forecasting whose numbers countries and companies gauge by informing billions of dollars worth of investment decisions, the IEA frequently revises its data.

Errors have occurred in supply and demand forecasts in both positive and negative directions over the past few years and have reached up to 2 million bpd.

“It’s hard to pass too much judgment on the reliability of the data and what it means,” said Craig Erlam, senior market analyst at OANDA.

“What the reports tell us though, as with other data, is that the market is extremely tight and there is little evidence that this will ease soon in the absence of Saudi Arabia pumping more or of a nuclear deal that brings more than a million Iranian barrels to market,” Erlam added.

Last year, the IEA presented a revolutionary new scenario by which the world could meet climate change goals and energy needs without any additional investment in new oil and gas fields.

Few countries have pledged to follow the IEA’s recommendation to halt new fossil fuel projects and the agency has warned that investment in renewable energy has not yet reached the pace needed to offset falling fossil fuels. investments in oil and gas.

On Friday, he called on major Middle Eastern producers Saudi Arabia and the United Arab Emirates to pump more to help ease tight supplies and high prices. Read more

“The higher benchmark demand does not affect the messages/findings of the IEA’s Net Zero report released last year,” the IEA said.

“The amount spent on oil appears to be geared towards a world of stagnant or declining demand. Increased spending on clean energy transitions is leading the way, but it needs to happen fast or we could be ready for tight markets future.”

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Reporting by Noah Browning; Editing by Simon Webb and Alexander Smith

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