Market Reports Point to Oil Glut

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The combined increase in output from North America and the Middle East last month led to the largest increase in global oil inventories since the COVID-19 pandemic, the International Energy Agency said Tuesday.

Waterborne oil in September increased by 102 million barrels, or roughly 3.4 million barrels per day (BBL/d), the agency said in its monthly oil market report for October, the largest increase since the pandemic.

"The oil market has been in surplus since the start of the year, but stock builds have so far been concentrated in crude in China and gas liquids in the United States," according to the report.

The U.S. is the world leader in crude oil production and, after months of forecasting a decline, its government revised its forecast to show growth next year after output hit record highs during the summer. China, meanwhile, is stockpiling reserves.

Downstream, the amount of crude oil processed by refineries was around 81.6 million BBL/d, some 4 million BBL/d below July levels. Military strikes on Russian energy infrastructure from the war in Ukraine, along with other outages and regular seasonal maintenance, is suppressing upstream activity globally, the IEA said.

Last week, IIR Energy reported that HF Sinclair Corporation (Dallas, Texas) was forced to shutter four units at its Tulsa East refinery in Oklahoma, sidelining about 125,000 BBL/d due to an undisclosed electrical issue. Meanwhile, IIR's Weekly Market Scorecard noted that Ukraine has a new weapons system dubbed Flamingo that can reach deep into the Ural Mountains, Russia's industrial center.

Global trade tensions, meanwhile, remain high. The Chinese government on Tuesday slapped sanctions on five U.S.-affiliated subsidiaries of South Korean shipbuilder Hanwha after President Donald Trump floated the idea of a 100% tariff on Chinese goods, dampening the market mood.

The International Monetary Fund (IMF), for its part, said it sees the global economy adjusting somewhat to Trump's trade policies as the threat from extreme tariffs were abated due to various multilateral agreements, though risks remain.

"Prolonged uncertainty, more protectionism, and labor supply shocks could reduce growth," the IMF reported on Tuesday. "Fiscal vulnerabilities, potential financial market corrections, and erosion of institutions could threaten stability."

Adding to the queue of forecasts, economists at the Organization of the Petroleum Exporting Countries (OPEC) expect global growth to be stable, but with some caveats.

"Beyond trade and geopolitical issues, concerns about high debt levels in key economies and U.S. debt yields, call for close monitoring in the near term," OPEC economists wrote in their monthly market report for October.

Markets were not thrilled by the trio of reports out early this week. With the IEA flagging a bloated market amid weak demand, oil prices were in retreat early in the Tuesday session. The price of Brent crude oil, the global benchmark, was trading near $62 per barrel, its lowest level since May.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).