Here’s why global oil demand fell this spring

According to data from the Joint Organizations Data Initiative (JODI) cited by Reuters.

Falling oil demand in China amid weeks of strict shutdowns in Shanghai spooked the oil market in April and through most of May as China’s zero-COVID policy led to mass testing and closures in the Chinese financial center which is home to 26 million people.

Global commercial oil inventories rose in April after months of continuous falls, but were still below the five-year average for this time of year.

After nearly two years of decline, observed global oil inventories increased by 77 million barrels in April, the International Energy Agency (IEA) said in its latest report. Oil market report Last week. OECD industrial stocks also rose, by 42.5 million barrels, or 1.42 million bpd, in April, helped by government stock releases of almost 1 million bpd. However, OECD industry inventories were 290.3 million barrels lower than the 2017-2021 average, the IEA said. According to preliminary data from May, total OECD stocks rose by 6 million barrels last month, the agency added.

Yet the IEA expects in its first outlook for 2023 an acceleration in oil demand next year, with global demand on average a record 101.6 million barrels per day (bpd) and exceeding pre-COVID levels.

“As higher prices and a weaker economic outlook moderate increases in consumption, a resurgent China will drive gains next year, with growth dropping from 1.8 mb/d in 2022 to 2.2 mb/d. j in 2023,” the IEA said in its widely followed report. Oil market report for June.

Next year, global oil supply may even struggle to catch up with demand, the agency said, as sanctions on Russia will further reduce supply when they officially come into effect at the end of this year. year.

“Global oil supply could struggle to keep pace with demand next year as tougher sanctions force Russia to close more wells and a number of producers face capacity constraints” , the IEA said last week.

By Charles Kennedy for Oilprice.com

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