A Summary Of The IEA's Latest Oil Market Announcement

oil barrels

Photo: ezioman via Flickr

The International Energy Agency released its monthly report today. Here’s what you should know:

  • Balances for first‐half 2011 show demand continuing to run ahead of supply, if a little less rapidly than in 2H10.
  • The absence of Libyan crude is still making an impact.
  • OPEC volume increases were nice, but still aren’t enough for the world in 3Q 2011.
  • IEA member governments have agreed to release 60 mb of strategic stocks for an initial 30 days (only about 1% of their inventory) because of Libya’s continued absence, because anticipated rise in 3Q11 refiner and end‐user demand, and because of a likely hiatus before incremental OPEC barrels reach the market (At this point they ask everyone to stop complaining about them for not doing this sooner, and say the Libya situation in February was not a good enough excuse for them to act.)
  • “Marker crude prices fell by $5/bbl immediately after the action was announced. Since then Brent futures have oscillated between $105‐$119/bbl, and WTI between $91‐$99/bbl. At writing, flat prices of $116/bbl (Brent) and $95/bbl (WTI) are close to those seen immediately prior to the action, but will doubtless fluctuate further in the weeks ahead.”
  • Refiner crude demand is rising for July and August, but IEA collective action should help keep prices low. (They’re seeing more demand than they did after Katrina in 2005!)

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