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IEA Lowers Oil Demand Growth Forecast Amid Looming Recession Fears

Commodities Jul 13, 2022 05:25AM ET
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© Reuters.

By Scott Kanowsky 

Investing.com -- The International Energy Agency has lowered its outlook for oil demand growth over the next two years, citing a negative impact from soaring prices and fears of a potential economic slowdown.

In its latest oil market report, the IEA said it now predicts oil demand will increase by 1.7M barrels per day in 2022 to 99.2M b/d. The organization had previously expected the number to rise by 1.8M b/d.

In 2023, the IEA now sees demand jumping a further 2.1M b/d - down from 2.2M b/d estimated last month.

The group warned market sentiment is being weighed down by concerns that central bank actions to curb spiking inflation will instead spark a recession. However, the IEA said this pessimism has been partially offset by strong power generation use and a comeback in oil demand in China.

Meanwhile, the IEA added that risks to the world oil supply persist, even as production in Russia remains resilient despite Western sanctions in the wake of the invasion of Ukraine. Global supply growth in 2022 is now seen moving slightly higher by 1.8M b/d, according to the IEA, but short-term strains could come from maintenance issues at a key pipeline in Kazakhstan and political tensions in Libya.

"Rarely has the outlook for oil markets been more uncertain," the IEA said in a statement on Wednesday.

The organization also flagged that global oil inventories remain "critically low," putting the spotlight on spare supplies held by Saudi Arabia and the UAE. The IEA called for "strong policy intervention" from governments to help maintain spare capacity, saying it is necessary to keep the world economy's recovery from the pandemic on track.

The worsening global outlook has led to a decline in crude futures, the IEA said, while premiums for physical barrels have grown this summer due to higher seasonal demand and constrained supplies.

As of 05:21 EST (0921 GMT), Brent crude futures were trading up by 1.20% at $100.68 per barrel, while the U.S. benchmark Crude Oil WTI Futures were 1.09% higher at $96.88.

IEA Lowers Oil Demand Growth Forecast Amid Looming Recession Fears
 

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Comments (2)
Andrew Ulferts
Andrew Ulferts Jul 13, 2022 9:16AM ET
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The IEA is a joke. They are political theatre, trying to sway sentiment. They are ALWAYS wrong. This is why social media is popular, because “journalists” know less than the rest of us. Just paid to print propaganda in most cases.
Dan Ray
Dan Ray Jul 13, 2022 9:16AM ET
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I encourage EVERYONE to read the IEA reports along with the Baker Huges reports. Your emphasis should without a doubt be more focused on the numbers. Everyone has an opinion but the numbers are actual fact.Anyone trying to discourage you by sowing seeds of doubt about the IEA most likely have an underlying motive to hurt you. As an oil field worker that experienced the boom leading up to the 2008 GFC and then the boom leading up to the 2015 crash, I know the pain and i don’t wish it on anyone invested in this sector. The more informed you are, the better off you will be
ge Kret
ge Kret Jul 13, 2022 6:04AM ET
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Oil will go to $150 per barrel by September 1st. These forcasts are always short. The airlines are increasing flights, shipping will increase 10%, and the grand Daddy of it all is that all the countries on the planet have depleated their OIL RESERVES AND NEED TO REPLENISH THE OIL THAT HAS BEEN RELEASED. Yes this is a good article, but the panic will settle in come September when its back to school and heating season arrives. Buy UCO now.
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Eagle Gon
Eagle_PT Jul 13, 2022 6:04AM ET
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not long ago the prices went negative without recession. now the recession is certain
MarcinYo Yo
MarcinYo Yo Jul 13, 2022 6:04AM ET
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Heathrow Asks Airlines to Stop Selling Seats to Ease ChaosAirport to impose 100,000 daily passenger limit till Sept. 11Heathrow follows Gatwick, Schiphol in capping capacity
ge Kret
ge Kret Jul 13, 2022 6:04AM ET
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MarcinYo Yo those flights get rerouted, the airlines go to other airports. Its just like JFK, Newark and Laguardia, when there is too many flights to one the others pick up the slack. The overall World increase is whats coming. Read the IEA report… oil demand is going up not down.
Dan Ray
Dan Ray Jul 13, 2022 6:04AM ET
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I encourage EVERYONE to read the report. It is beyond ignorant if a person refuses to do so. In fact, it should be read by EVERYONE.Remember this. ANYONE that attempts to discourage you from educating yourself about the USA’s petroleum supply from the IEA is helping you to dig your own grave. I’d go as far as to say that these people have an underlying motive to hurt you.Read the reports and educate yourself about petroleums history. Especially from the early 2000’s. You must also read the Baker Hughes reports.
Dan Ray
Dan Ray Jul 13, 2022 6:04AM ET
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Most people are struggling to pay for gasoline. Do you really believe that people have the same disposable income to travel and *****money like they did in 2021? ******no. October 2021 was the beginning of the end of the greatest hospitality boom we’ve ever had. I captain yatchs in arguably the most popular tourist destination in the world. Holloween weekend last year was the first holiday weekend in over 5 years that our company didnt have a single booking. Everyone began canceling. And the final nail in the coffin was after the first two weeks of March.
 
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