Oil price relief could be “on the horizon”

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The International Energy Agency said on Tuesday that global oil markets remained tight, but “relief from a price rally could be on the horizon” as US production rises.

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why it matters: Its latest monthly analysis comes as elevated oil – and therefore gasoline – prices are another political headache for President Biden amid widespread inflation.

Running news: The IEA’s report does not change its global demand growth forecasts for 2021 and 2022, but records a significant increase in supply despite OPEC+ sticking with modest production growth.

  • The IEA said global supplies “bounced” to 1.4 million barrels per day (MBd) in October as production increased from Hurricane Ida, and another 1.5 MBd is expected in November and December. The US is the biggest supply boost.
  • The IEA has raised its US production outlook for the balance of this year and 2022 “as current prices provide a strong incentive to boost activity, even as operators stick to capital discipline pledges.”
  • This sees the US returning to pre-COVID production levels by the end of 2022.

What will happen next: On a related note, Reuters report: “Crude oil production from the Permian Basin, the largest US oil field, is set to surpass its pre-pandemic record in December, a sharp change that has not been replicated in the country’s other oil fields.”


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