The IEA will be cataclysmically wrong about oil demand in 2022
Judging by the title, I’m sure you already know what I think of the IEA and its ability to forecast oil demand and supply.
For those of you who are fully aware of the global oil supply and demand forecast for 2022, the #1 variable that will determine whether or not we are oversupplied or undersupplied is global oil demand. . But to be precise, it is the OECD oil demand.
Here is our article on global oil supply and demand for October.
At the time, we were basically saying that the IEA had plenty when it came to estimating global oil demand. China and India were already showing structurally higher oil demand compared to the 2019 (pre-COVID) baseline, so it was only a matter of time before global oil demand exceeded levels. of 2019. In order to combat the presumption of a global oil shortage, the IEA deliberately suppressed the OECD oil demand for 2022 by approximately 2.5 million barrels per day compared to that of 2019 Surprisingly, it was exactly the same amount earned by non-OECD countries.
As a result, the IEA was trying to reassure the United States that global oil markets would return to surplus in 2022. But the house of cards is beginning to crumble for the IEA. Oil prices are already rising despite a coordinated release intervention from the SPR, and the latest US oil demand data suggests the IEA’s assumptions are going to be so wrong they’re going to look bad.
Here is the latest IEA forecast for oil demand in North America:
Here’s what the EIA had in its latest weekly report on oil storage over an average of four weeks:
There will be plenty of eggs flying past the IEA in March (when they release January demand data). And for those of you following, IEA is already about 2 million bpd behind North American demand alone. That doesn’t leave much room for them to be right after that miss.
But none of this is new because, as we’ve said many times over the past few years, the IEA is notoriously bad at estimating global oil demand. It structurally underestimates demand and revises them upwards after the fact. Just look at the fact that he is still revising the rise in oil demand in 2020 in his January 2022 Oil Market Report:
What’s hilarious about the horrific supply and demand estimates is the fact that the IEA admitted itself to the latest oil market report. At the very end of the report, the IEA goes on to say:
Oops, where did the extra 200 million barrels go?
So yes, I’m overwhelmed. I’ve been screaming for seven months to anyone who wants to listen that the IEA’s oil market supply and demand projections for 2022 are wrong. And the variable they are going to be incredibly wrong about is OECD oil demand.
Well, with the data now showing they’re going to start the year, it’s time for the IEA to eat some crow.