London — An oil market rally may ease off as prices that hit a three-year high in October help push up global production, particularly in the US, the International Energy Agency (IEA) said on Tuesday.
But the Paris-based agency said in its monthly report that US production, despite climbing, would not return to pre-pandemic levels until the end of 2022.
“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon … due to rising oil supplies,” the IEA said.
“Current prices provide a strong incentive to boost [US] activity even as operators stick to capital discipline pledges,” it said.
A hurricane battered the main US production and export hub in the Gulf coast in late August but US output made up for half the increase in global oil production in October and is due to account for 60% of nonOpec+ supply gains in 2022.
Oil stored in industry stocks for OECD countries dropped by 51-million barrels in September and were a 250-million barrels below the five-year average and at their lowest since the start of 2015. Preliminary October data pointed to a slight increase.
“Global oil demand is strengthening due to robust gasoline consumption and increasing international travel as more countries reopen their borders,” the IEA said.
“Long the weak link in the demand recovery, a resurgence in jet fuel consumption is at last on the horizon,” it said, as countries such as US, Australia, Thailand and Singapore lifted international travel curbs.
But it said an uptick in coronavirus cases in Europe, weaker industrial activity and higher oil prices could dent demand.
The IEA kept its outlook for oil demand growth largely steady at 5.5-million barrels per day for 2021 and 3.4-million bpd in 2022.