Tight oil markets seem to be adjusting as the IEA’s November Oil Market Report shows increased supply coming online.
According to the IEA report world oil supply is set to rise by 1.5mb/d over November and December cementing October’s 1.4mb/d rise. Supply growth was led by the US with 400kb/d of the gain followed by Saudi Arabia and Russia, which together would account for a combined 300kb/d gain in line with OPEC targets.
Notably refinery margins rose despite the higher oil prices, driven by “exceptionally tight product markets.” Both gasoline demand and prices were up by almost 50% in October according to the latest US government data. The IEA notes that refinery throughput is expected to stabilize and generally hold flat in 1H22.
The IEA left its oil demand forecasts unchanged since October with 5.5mb/d growth expected for 2021 and 3.4mb/d growth expected for 2022.
Brent oil futures were trading at approximately $81/bbl down from October’s $86/bbl high.