What can affect the world until October for additional oil supplies as output losses from Hurricane Ida wipe out increases from OPEC, according to Bloomberg - The World Energy Agency
Consumers should have enjoyed idle gains in production as the Organization of Petroleum Exporting Countries and its allies continued their revival of solid capacity, the agency said in its monthly report. Instead, global supply fell through unexpected disruptions of 540,000 barrels a day in August due to global instability and will be flat for the remainder of this month.
Unplanned production outages have temporarily halted an uptrend in world oil supply that began in March, but the growth of developed economies is set to resume in October, said the IEA in Paris.
The lack of supply hasn t had a big impact on prices because of bearish trends in fuel consumption. Global oil demand has been decreasing since July as rising covid 19 cases prompt mobility restrictions in Asia, the IEA said. For most of this month, crude has traded near $70 a barrel in New York for the prices of oil.
Travel and energy consumption will reduce by 310,000 barrels a day from July to September on average, the IEA said. Yet there are signs that the coronavirus resurgence is abating and the agency expects a sharp rebound in demand of 1.6 million barrels a day next month with continued growth to the end of the year.
The matching shifts in supply and demand meant this year prevailing oil-market trend - shrinking inventories - went unabated. Fuel stockpiles in developed economies fell by 30 million barrels of fuel last month, putting them 186 million barrels below the five-year average, according to preliminary IEA estimates. There should be hefty draw again this month, the agency said.
It will be only by early 2022 if supply is high enough to allow oil stocks to be replenished, according to the report. Until then, strategic oil stocks from the U.S. and China may go some way to help plug the gap. Hurricane Ida, a Category 4 hurricane that hit the Gulf Coast on August 29th, initially shut down 1.7 million barrels of oil producing a day. Weeks later, the industry is still struggling to restart many of the affected fields and the region s crude output is expected to be down as much as 650,000 barrels a day on average this month, the IEA said.
While most OPEC saw output increase in August, a handful of members and numerous allied producers were affected in production. In August, OPEC crude oil supply fell to 41.58 million barrels of barrels in total as increases in Nigeria, Kazakhstan and Mexico failed to offset losses from Saudi Arabia, Iraq and Russia.
The group is scheduled to revive another 400,000 barrels a day of idle capacity this month, but members like Nigeria, Angola and Malaysia continue to struggle to boost output, the IEA said.