daniel chigunwe
The US reversed its forecast for a crude glut next year and is now calling for a small oil-market deficit.
Global oil consumption should exceed output by 100 000 barrels a day in 2025, according to a monthly report from the Energy Information Administration out Tuesday. That compares with a 300 000 barrel-a-day surplus forecast last month.
The forecast comes after Opec and its allies deferred supply increases for three months, which the EIA expects will tighten the market.
The US outlook, however, runs counter to that of the International Energy Agency, which last month predicted a 1 million barrel-a-day surplus in 2025 despite the Opec+ decision. The IEA is due to update its forecast later this week.
The downward revision points to “a market that got too bearish and has since revised away worst-case-scenario outcomes,” said Jon Byrne, analyst at Strategas Securities.
The forecast reversal likely won’t have a major impact, since markets have already priced in an Opec+ production delay, he added.
“We maintain our outlook for a range-bound market in the US$65 to US$75 range for WTI,” Byrne said, referring to West Texas Intermediate. Futures traded just above US$68 a barrel on Tuesday in New York.
Investors are closely watching balances for next year, as weak demand and rising production outside of Opec keep oil futures rangebound. Adding to bearish sentiment, Saudi Arabia cut oil prices for buyers in Asia over the weekend, underscoring the market’s weakening outlook. — Bloomberg
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