Is a gross overabundance looming?

The supply of crude oil in the world exceeded the demand of 900,000 barrels per day in the first half, the International Energy Agency said in its latest monthly report on the oil market, adding that forecasts were reporting a daily deficit of half a million barrels.

Moreover, the authorities have indicated that the overhang will also extend into the second half of the year: "This surplus comes in addition to the huge inventories created in the second half of 2018, when oil production rose sharply as demand began to rise. to falter "IEA said. "Clearly, the tighter market is not a problem at the moment and any rebalancing seems to have been farther into the future."

In the demand side, however, the IEA has had good news. He said that despite an "exceptionally low" growth rate in the first quarter – 310,000 b / d – and a more robust growth of 800,000 b / d in the second quarter, global demand for oil would increase by an average of 1.8 million b / d in the second half. According to the authorities, this acceleration is linked to the rise in production of petrochemical plants and the improvement of economic activity.

The last part of this projection goes against the persistent concern over the global economy, recently expressed by US Federal Reserve Chairman Jerome Powell. In his testimony before Congress earlier this week, Powell said he expected a slowdown in the United States caused by a more general slowdown in the global economy, particularly because of Japan's global trade niche. Chinese.

In the future, the IEA announced that it also provided for a supply surplus for 2020, due to the growing supply of non-OPEC producers. . This is in line with OPEC's forecast for 2020: the agreement calls for non-OPEC output growth of 2.4 million bpd. The IEA is a little more moderate, forecasting an increase in supply of 2.1 million bpd in 2020 from non-OPEC producers.

By Irina Slav for Oilprice.com

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