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Business EconomyPosted at: Oct 14 2021 4:13PM


Scaling oil prices could keep market in deficit: IEA report

Bengaluru, Oct 14 (UNI) Oil prices are scaling multi-year highs as a shortage of natural gas, LNG and coal boosts demand for oil, which could keep the market in deficit through at least the end of the year, IEA said Thursday.
Brent crude futures rose by more than $10/bbl to surpass $83/bbl, while West Texas Intermediate traded above $80/bbl at the time of writing, the International Energy Agency (IEA) said in its monthly oil report.
The surge in prices has swept through the entire global energy chain, fuelled by robust economic growth as the world emerges from the pandemic, IEA said.
Record coal and gas prices as well as rolling blackouts are prompting the power sector and energy-intensive industries to turn to oil to keep the lights on and operations humming, it said.
The higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery, IEA stated.
For now, a reduction in the number of new Covid cases and rising mobility are lending support to oil demand, it said.
The global gasoline demand is currently running 2 per cent below pre-Covid levels compared with a deficit of more than 10 per cent at the start of the year, and air travel is lagging further behind, IEA said.
"All in all, world oil demand is forecast to rise by 5.5 mb/d, to 96.3 mb/d in 2021 and 3.3 mb/d in 2022, when it is set to reach pre-Covid levels," it added.
World oil supply, meanwhile, is projected to rise sharply in October as US output bounces back from Hurricane Ida and OPEC continues to unwind cuts, IEA said.
Earlier this month the producer group reconfirmed its agreement to boost output by 400 kb/d for November, despite calls from major consuming countries for a more substantial increase to stall the decline in global oil inventories and the rise in prices, it said.
Preliminary data shows OECD industry stocks fell 23 mb in September to stand 210 mb below their five-year average and at their lowest level since March 2015, IEA said.
With OPEC currently on track to pump 700 kb/d below the call for its crude during 4Q21, inventories will continue to decline, it said.
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