- Oil extends rally to highest since November as IEA warns of potential surge in volatility
- October ’23 WTI gains 35c this morning to trade around $89.19/Bbl
- OPEC, in its September monthly report, forecasted an over 3 MMBbl/d supply deficit for 4Q23, potentially the largest in over a decade, as Saudi and Russia extended production cuts
- Yesterday, both oil benchmarks finished at their highest since November 2022, WTI at $88.94 and Brent at $92.06
- U.S. inflation accelerated in August, with annual CPI up 3.7% versus 3.2% in July and core inflation at 4.3% versus 4.7% in July
- However, Fed officials are expected to hold rates steady while debating if another rate hike in November or December will be necessary to maintain recent progress in slowing inflation
- The dollar traded higher, and equity futures were lower after the August CPI release
- IEA warns OPEC+ production cuts to send oil price volatility soaring (Bloomberg)
- Supply cuts by Saudi Arabia and Russia will cause a “significant supply shortfall”, warned the IEA, threatening renewed price volatility
- “Already in August, we saw global oil inventories falling by a massive 75 MMBbl, according to preliminary data,” said Toril Bosoni, head of IEA’s oil division
- In its September monthly report, IEA estimated 2023 demand growth stable at +2.2 MMBbl/d, reaching 101.8 MMBbl/d, with China, jet fuel, and petrochemicals as the main drivers
- The bloc noted that China, despite wrestling with multiple economic crises, will account for 75% of the growth in 2023
- Demand growth forecast for 2024 fell slightly to +0.99 MMBbl/d, affected by slow GDP growth and a decline in transport fuel use
- Non-OPEC production forecast for 2024 is up by 0.1 MMbl/d to 68.8 MMBbl/d, OPEC production forecast is down to 28.4 MMBbl/d from 29 MMBbl/d; non-OPEC+ to drive 2024 supply growth increase to +1.7 MMBbl/d