Rebounding economic activity and natural gas shortages recently pushed the developed world’s oil reserves to their lowest since early 2015, but growing crude supply could soon ease that pressure, the International Energy Agency said Tuesday.
In its closely watched monthly market report, the IEA said that the tight supply and demand balance in the global oil market could be about to ease. It expects output to rise by 1.5 million barrels a day in the remainder of 2021, with the U.S., Saudi Arabia and Russia accounting for around half of that amount.
At the same time, while demand for transportation fuels continue to recover and a supply shortage in the natural gas market has forced some power plants to switch to using oil and refined products, “new Covid waves in Europe, weaker industrial activity and higher oil prices will temper gains,” the Paris-based energy watchdog said.
Oil prices rose early Tuesday, recouping some of their losses that followed speculation that the U.S. would tap its Strategic Petroleum Reserves for extra supply. With the U.S. Energy Information Administration also forecasting growing supply from 2022, “it is not clear whether the Biden administration will still feel that it is necessary to take action,” said ING analyst Warren Patterson.
A full version of this report can be found at WSJ.com.