Rising global oil supply appears to be on top of the list of concerns for oil trading giants and industry analysts, according to the speakers at the Asia Pacific Petroleum Conference (APPEC) in Singapore this week.
Many participants in the event expressed more concern about upcoming supply than about slowing demand.
While recognizing that demand has undershot expectations this year, renowned analysts and the top executives at oil traders fear a growing oversupply next year. The OPEC+ group plans to unwind its ongoing production cuts gradually over the course of 2025 and is set to add about 2 million barrels per day (bpd) to supply by the end of next year, per the current production timeline.
With global oil demand expected to rise at a much slower pace, and with non-OPEC+ producers continuing to add supply outside OPEC+’s control, the balance in the oil market is further tipping into oversupply, according to analysts.
Demand, on the other hand, hasn’t helped much in absorbing all the supply growth. China has disappointed so far this year, due to its property crisis and underwhelming economic growth. Structural shifts in transportation such as EV intake and rising share of LNG-powered trucks have also weighed on Chinese road fuel demand.
Chinese oil demand growth has slowed to about 200,000 bpd each year, compared to 500,000 bpd - 600,000 bpd annual growth in the five years before Covid, Goldman Sachs’s head of oil research, Daan Struyven, said at APPEC.
China’s shift toward EVs will bring about domestic gasoline demand peaking either this year or next, according to Vitol Group’s CEO Russell Hardy.
Jeff Currie, chief strategy officer of energy pathways at Carlyle, stands out as a more bullish voice among the mostly bearish outlooks. Currie said at APPEC that oil market participants are “dramatically overestimating” a supply glut, as Chinese demand is not as doom-and-gloom as headline figures suggest and U.S. crude oil production is basically flat this year.
By Charles Kennedy for Oilprice.com
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So all in all. the net combined additions to global oil supply by the United States, Norway, Brazil and Guyana amounts to 690,000 b/d in 2024. But this is offset by a decline in Libya's supplies on and off by an estimated 500,000-700,000 b/d..
Therefore, rising global oil supply couldn.t be the reason for the decline in oil prices. The proof is that the United States has only succeeded in adding 27 million barrels (mb) or 9.3% of the 288 mb the Biden administration withdrew from the SPR because US production is hardly able to contribute to the refilling of the SPR and there is no spare oil in the market for the US to buy.
This leaves market manipulation by the United States in cahoots with the IEA, speculators, oil traders and Reuters to depress oil prices as the most plausible reason.
Dr Mamdouh G Salameh
International Oil Economist
Global Oil Expert
Rising Oil Supply Emerges as Top Concern for Crude Traders