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World NewsIEA sees a potential reprieve as U.S. production rises

IEA sees a potential reprieve as U.S. production rises

Petroleum pump jacks are pictured within the Kern River oil area in Bakersfield, California.

Jonathan Alcorn | Reuters

LONDON — The International Energy Agency stated on Tuesday that hovering oil costs might quickly flip decrease as the U.S. leads a rebound in international provide.

Oil costs have soared above $80 a barrel over the previous few weeks, hitting their highest degree in seven years, as demand outstripped provide. The momentum behind the value rally has even tempted some forecasters to foretell a return to $100-a-barrel oil, though not everybody shares this view.

“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon,” the IEA stated in its carefully watched month-to-month report.

“Contrary to hopes expressed in Glasgow at COP26 this is not because demand is declining, but rather due to rising oil supplies.”

Demand for oil can be strengthening due to strong gasoline consumption and rising worldwide journey as extra nations re-open their borders, the influential power company stated.

Higher oil costs, weaker industrial exercise and an alarming resurgence of Covid-19 infections in Europe, nevertheless, will seemingly mood worth rises, the group added.

International benchmark Brent crude futures traded at $82.78 a barrel on Tuesday morning in London, up round 0.9%, whereas U.S. West Texas Intermediate futures stood at $81.48, over 0.7% increased.

The IEA saved its forecast for oil demand progress largely unchanged from final month at 5.5 million barrels per day for 2021 and three.4 million barrels per day for 2022.

Supply increase

On the provision aspect, the group stated it anticipated a rise of 1.5 million barrels per day in international oil output within the last three months of the yr, with the U.S. alone accounting for 400,000 barrels of this progress.

OPEC kingpin Saudi Arabia and non-OPEC chief Russia are every set to account for 330,000 barrels per day of the rise, in keeping with their OPEC+ targets. By December, Saudi Arabia and Russia are every set to pump over 10 million barrels per day for the primary time since April final yr, the IEA stated.

The power company revised its international oil provide forecast 330,000 barrels per day increased for the fourth quarter to succeed in 99.2 million barrels per day by year-end. That’s up 6.4 million barrels per day year-on-year.

The U.S. is forecast to account for 60% of non-OPEC+ provide positive aspects subsequent yr, now forecast at 1.9 million barrels per day, though the nation is just not anticipated to return to pre-Covid ranges till the tip of 2022.

The IEA stated that whereas stronger oil costs had prompted some U.S. producers to ratchet up production, the identical couldn’t be stated for OPEC+.

The power alliance determined to maintain production coverage regular in early November, elevating output 400,000 bpd, defying stress from main shoppers for a increased improve to assist cool the market.

The oil producer group is ready to satisfy once more on Dec. 2.

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