The International Energy Agency (IEA) reported that the world oil market is expected to face a significant surplus in the new year, with public stocks exceeding 1.2 billion barrels and OPEC+ spare capacity at historic highs. The agency reassured markets that it stands ready to address any potential supply disruptions from Iran. Despite recent price increases driven by concerns over Israeli and Iranian tensions, supply remains stable, leading to the surplus outlook.
Libya has resumed crude oil production after a political crisis regarding the central bank, which had previously reduced exports to a four-year low. The National Oil Corporation announced the restart of production on October 3, with output reaching approximately 1.3 million barrels per day by October 13. This increase in supply coincides with maintenance at European refiners, leading to a decline in prices for competing crude grades. In September, Libya’s exports fell to about 550,000 barrels per day, but they have since recovered to over 600,000 barrels per day in October. Analysts expect exports to continue rising as production stabilizes.
Overestimating China’s crude oil demand has impacted oil markets this year, particularly for OPEC, and this trend is expected to continue. The International Energy Agency (IEA) highlights that the shift towards electric mobility is challenging traditional oil producers. China, the largest oil importer, is at the forefront of this transition, achieving a 50% market share in new electric vehicle sales, a level expected globally by 2030. This shift could displace about 6 million barrels per day of global crude demand, posing a risk to the long-term bullish outlook for oil that producers are counting on. While China has also increased coal usage to support electrification, its reliance on coal for electricity generation is anticipated to peak in the coming years, despite overall electricity demand continuing to rise.
Please see this week’s DOE Report below.
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Propane
The EIA reported a build of 3.366 million barrels on US propane inventories for the week ending October 11th to 103.1 million bbls overall (see the DOE report below). The build was well above the industry expectations calling for a build of 1.9-million-barrels, and above the 5-year average for week 41 of a draw of 239,000 barrels. Region specific the Gulf region saw the bulk of the build of 2.24 million bbls, while the Midwest also had a build of 420k bbls for last week. At 28.7 million bbls, the Midwest region is up 3.6% from the same week of 2023.
Propane exports were at 1.533 mil bpd versus 1.542 mil bpd last week. Production was at 2.683 mil bpd versus the 2.701 mil bpd last week.
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