As soon as the International Energy Agency (IEA) tells you that they are comfortable with the global Oil supply outlook, it is time to worry. Oil prices are rising as the IEA which raised their demand forecast three consecutive times now says that global oil demand will grow by 1.2 to 1.3 million barrels a day which would be another upward revision assuming it comes at the higher end of that range. Yet the IEA director says “This growth is more than enough to meet the global oil demand.. So, in the absence of major geopolitical turmoil or major extreme weather events, we would expect a rather comfortable oil market and moderate oil price evolution throughout 2024” according to Bloomberg News. Yet as I have written many times before the IEA seems to put a happy face on these predictions, so it does not detract from their green energy agenda. As they tell us to be comfortable and not to worry, we are seeing a surge in global diesel prices and we are seeing a significant drop in the global oil supply.
Kpler Commodity Intelligence showed that global oil inventories have fallen by 81 million barrels, in contrast to a year ago when global oil inventories became bloated by 40 million barrels enhanced with releases from Joe Biden’s Strategic Petroleum Reserve release. Now the IEA may be riding a sense of a false sense of security as global oil inventories according to Kpler at the lowest level since at least 2017 since they have been tracking global inventories. Executive Director Fatih Birolm told Bloomberg that he believes that the pace of demand growth will be significantly weaker than a year ago but that will be easily matched by swelling production from the Americas, predominantly the US, Canada, Brazil and Guyana. But are they going to raise output as much as the loss of the SPER barrels from a year ago.
Birol reiterated the IEA’s forecast that global oil demand will hit a plateau before the end of this decade as the world shifts away from fossil fuels to limit climate change. Saudi Arabia announced last week it won’t proceed with plans to expand oil production capacity over the next few years, and on Monday the kingdom’s energy minister acknowledged the decision was linked to the energy transition. Renewable energy is becoming increasingly prevalent in power generation, and electric vehicles are “booming” around the world, Birol said. “Clean energy is moving fast — faster than people realize” according to Bloomberg.
Yet with the IEA track record so far should I be impressed? For years I have written about the IEA’s loss of mission from being an agency concerned about energy security into a political mouthpiece for the green energy transition madness. I have questioned their prediction as being more politically motivated and now I am not alone.
In Today’s Wall Street Journal op-ed Robert McNally writes “The International Energy Agency once provided solid information. Its reports can no longer be trusted.
He writes “Unfortunately, in recent years, the IEA has succumbed to politicization and strayed from its security mission. In 2020 the IEA bowed to enormous pressure from climate activists and ceased publication of oil and gas demand forecasts that didn’t show demand for those fuels would soon peak because of imaginary future climate policies. Green groups had been angry over IEA baseline forecasts showing what the activists regarded as too much oil and gas demand. This was because these baseline forecasts assumed only the laws currently on the books and didn’t engage in conjecture about future green policies. As a result, IEA’s influential demand forecasts now reflect wishful thinking about the timing and cost of a peak in oil and gas consumption. EIA capitulation to political pressure transcends mere technical debates among energy-forecasting experts. Bullying the world’s respected energy authority to mislead the world into thinking that oil and gas demand will soon peak might align with the preferences of certain governments and activists. But the distortion and politicization of the IEA’s once-respected forecasts pose significant risks.”
I agree with Mr. McNally because of risks of bad data have forced many countries to make bad decisions as far as fossil fuel investments because of the International Energy agency’s political push and their bad forecast it’s going to sleepwalk the globe into another global energy crisis the IEA has admitted that their data has been wrong they have lost millions of barrels of oil and they have consistently under-reported demand and overestimated supply. This is in the name of making the green energy transition look plausible to world leaders who are gullible to this green energy agenda.
This type of misinformation also leads to the belief that we can replace all of our natural gas appliances or ban LNG exports without it leading to a much more unstable energy market in a much more unstable world.
OPEC just came out raised its 2024 world economic growth forecast to 2.7% (previous 2.6%) and its 2025 world economic growth forecast to 2.9% (previous 2.8%) They said that “ Further economic growth upside potential could materialize in all major OECD and non-OECD economies.” OPEC also showed that their crude production fell by 350,000 bpd to 26.34 million bpd in January as a new round of voluntary OPEC+ cuts took effect. The global oil demand growth forecast for 2024 remains unchanged from last month’s assessment at 2.2 mb/d.
A slight upward adjustment to the US forecast has been made given the improving expectation for the US economy, which will have a positive impact on oil demand. This offsets the downward revision made in OECD Europe. The OECD is projected to expand by around 0.3 mb/d and the non-OECD by about 2.0 mb/d this year. In 2025, global oil demand is expected to see a robust growth of 1.8 mb/d, y-o-y, unchanged from the last month’s assessment. The OECD is forecast to grow by 0.1 mb/d, while demand in the non-OECD is forecast to increase by 1.7 million barrels a day.
This week oil supplies may rise due to seasonal factors, but the trend is lower. With crack spreads rising and supplies tightening, that is why we continue to warn about upside price risk.
Natural gas is plummeting to a level where many providers may be put out of business. We think the bloodletting should be coming to an end but a drop in temperatures could help basil some producers out.