Bearish IEA Assessment For Crude Oil

CRUDE OIL 

Prices are under pressure this morning from a bearish supply outlook from the International Energy Association and overproduction by OPEC+. The IEA reported overnight that it expects global oil supply to exceed demand by around 600,000 barrels per day this year and that the surplus could grow by a another 400,000 bpd if OPEC+ extends its unwinding of cuts and fails to rein in overproduction. IEA lowered its demand growth forecast by 70,000 bpd to around 1 million bpd. In their monthly update, OPEC said OPEC+ output increased 363,000 barrels per day in February to 41.01 million bpd, due primarily to overproduction by Kazakhstan. The increase was more than twice the planned 138,000 bpd that was due to start in April when OPEC+ quotas are expected to be gradually lifted. According to the OPEC data, which Reuters compiles from secondary sources, Kazakhstan produced 1.767 million bpd of crude in February, up from 1.570 million bpd in January and well above their OPEC+ quota  of 1.468 million bpd.

NATURAL GAS

May Natural Gas reached its peak this week on the tariff wars, when Canada was threatening to hold back electricity supply and the US President was threatening to raise tariffs on Canadian steel to 50%. Theoretically, losing access to Canadian power would drive US natural gas demand higher for the electrical generation. This set the market up for a blow-off top. The premier of Ontario is meeting with the US Secretary of Commerce in Washington today. Financial firm LSEG has forecast average gas demand in the Lower 48 states, including exports, to fall from 111.6 bcfd this week to 104.3 bcfd next week. This was a decrease from Tuesday’s forecast of 113.3 bcfd for next week. They also said average gas output has risen to 105.8 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February. World Weather Service says a mini blizzard will impact the eastern Dakotas, western Minnesota and neighboring areas Friday night into Sunday morning with 4-10 inches of snowfall and local totals of 12 inches or more expected.

PRODUCT MARKETS

Product prices have backed off from overnight highs in the wake of bearish assessments from IEA and OPEC. Gasoline stocks saw a larger than expected decline last week, and implied demand was the strongest for this point in the season since 2020. However, stocks are still above a year ago and the five-year average.

>Interested in more futures markets?  Explore our Market Dashboards here.