The International Energy Agency (IEA) is forecasting the end of the current rally in oil prices as tightness in global oil supplies begins to ease and production ramps up in the U.S.
Demand remains strong but supply is catching up and changes in oil stockpiles seen in October suggest "the tide might be turning," according to the IEA’s monthly report.
If the latest forecast proves to be correct, it would provide a significant relief for harried consumers who are suffering the consequences of price inflation across the globe.
Global oil output increased by 1.4 million barrels a day last month, and will add as much again over November and December as the Gulf of Mexico restores supplies halted by Hurricane Ida.
American shale drillers are also taking advantage of higher prices to bolster drilling. Those extra barrels are coming onstream as the OPEC+ alliance continues to revive exports it halted during the pandemic, the agency said.
Crude futures surged above $86 U.S. a barrel in London last month on the combination of recovering post-pandemic consumption and a shortfall of natural gas supplies that spurred extra demand for oil. Prices have since retreated to under $83 U.S. as America contemplates action to bring down fuel costs.
President Joe Biden has been considering a release from the Strategic Petroleum Reserve after the Organization of Petroleum Exporting Countries (OPEC) and its partners rebuffed his calls to restore production more quickly.
OPEC Secretary-General Mohammad Barkindo reiterated the group’s stand-point recently, saying that global oil markets are poised to return to surplus in December.
The IEA bolstered forecasts for U.S. production in the fourth quarter by 300,000 barrels a day, and for next year by 200,000 a day. American output will climb by 1.1 million barrels a day in 2022, accounting for 60% of the growth outside the OPEC+ coalition.
