JPMorgan says the global oil market has moved back into surplus after months of Middle East disruption. Recovering exports and weaker demand drove the shift, with the surplus reaching 1.4 million barrels per day in October.
The global oil market is moving back into surplus as recovering exports from the Middle East and weaker demand push supply ahead of consumption, JPMorgan said in a note on Wednesday. The shift follows months of disruption caused by conflict in the region.
Surplus widens from September to October
JPMorgan estimates a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October. That nearly matches last year's average of 1.3 million bpd.
Inventories and trade flows both indicate that excess barrels are returning to the market, the bank said. Global crude imports rose to 44.9 million bpd in October, up 1.3 million bpd from a year earlier.
Middle East exports recover, other regions add supply
A key factor behind the shift has been the recovery in Middle Eastern oil exports. They have climbed to around 20.7 million bpd from a low of 9.8 million bpd in March, although volumes remain below pre-war levels.
Rising output elsewhere has also contributed. The bank estimates that Latin America alone is supplying about 1.5 million bpd more crude than a year ago, led by Brazil, Venezuela, Guyana and Argentina.
Demand weakens as fuel prices bite
On the other side of the balance, JPMorgan says global demand has fallen by an estimated 3.3 million bpd since the start of the conflict. High fuel prices and supply disruptions curbed consumption.
Source: Reuters via Investing.com
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