Oil market forecasts from the International Energy Agency (IEA) may be overly pessimistic, with recent data suggesting a larger-than-expected drawdown in global inventories. This unexpected trend could prompt a revision of the IEA’s forecasts for 2025, which previously predicted a significant surplus in global oil supply.
According to the IEA’s latest Oil Market Report, global stock withdrawals have been accelerating at a rate much higher than anticipated. In the third quarter of 2024, actual global oil stock draws were nearly three times higher than the agency’s earlier projections. The IEA had forecast a decline of 380,000 barrels per day (bpd) from July to September, but the actual reduction was 1.16 million bpd, indicating a major mismatch between expected and observed market conditions.
This discrepancy between real-world inventory levels and the IEA’s projections is largely attributed to “missing barrels”—inventory data from certain countries is either unavailable or incomplete, the agency noted. As a result, there is growing speculation that the IEA may soon revise its 2025 demand forecasts upward to align with these unexpected drawdowns.
For months, the IEA has maintained a bearish outlook, predicting a surplus of more than 1 million bpd in global oil supply in 2025. This forecast was based on expectations of weak Chinese demand, the return of full-capacity production from Libya, and the unwinding of OPEC+ production cuts. However, with inventories falling faster than anticipated, analysts are questioning the accuracy of these predictions.
In September, global oil stocks dropped by 47.5 million barrels, the steepest decline since January, according to the IEA. This was driven by substantial reductions in both OECD oil products and non-OECD crude oil stocks. OECD industry stocks alone fell by 36.4 million barrels to 2.8 billion barrels, leaving them 95.3 million barrels below the five-year average. Preliminary data also suggest that global stocks continued to decrease in October, marking a fifth consecutive month of declines.
Other market forecasters, such as the U.S. Energy Information Administration (EIA), have also reported significant drawdowns. The EIA’s November Short-Term Energy Outlook estimates a 900,000 bpd drop in global inventories for the third quarter, the largest draw since the fourth quarter of 2021.
Given these developments, analysts believe that the IEA may need to revise its oil market balances for 2025. UBS Group commodity analyst Giovanni Staunovo anticipates that the IEA will increase its demand projections, leading to a less bearish outlook for the coming year.
While global oil demand remains sluggish, the IEA’s November report also highlighted a steady rise in supply, particularly from non-OPEC+ countries like the U.S., Canada, Guyana, and Argentina. Despite this, the agency’s initial forecast of a 1 million bpd surplus next year may be too high, given the faster-than-expected drawdowns observed in recent months.
As the IEA and other agencies reassess their outlooks, it is clear that the dynamics of the global oil market are evolving, potentially leading to a tighter market in 2025 than previously projected.
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