Oil demand set to hit record on falling inventory, says IEA

Oil demand set to hit record on falling inventory, says IEA

LONDON: Despite lingering concerns about China’s economy, global oil demand hit a record high in June and could be on track for another record in August, the International Energy Agency (IEA) said in its latest monthly report. The cuts from OPEC+ and Saudi Arabia, coupled with expected continued strength in demand, are set to result in inventory draws for the rest of the year, supporting oil prices, analysts and forecasting agencies say.

China, of course, will be the key driver of price moves either up or down, depending on how its economy fares and how much stimulus authorities are ready to unroll to help a much-awaited rebound after the reopening early this year. So far into 2023, weaker-than-expected Chinese economic data have stopped price rallies in their tracks. US economic prospects have turned somewhat brighter, with the Fed and investment banks no longer expecting a recession.

Macroeconomic fundamentals of the world’s largest and second-largest economies — the US and China —- are turning more bullish to support oil prices with oil demand possibly heading to a fresh record this month, forecasts by the International Energy Agency (IEA) said. Analysts said market fundamentals also favor a sustained bull run for oil, especially with