Energy Report: When IEA Is Smiling

They also admit that upstream investment dropped by 30 percent last year compared with 2019. This year, the IEA expects it to increase "only marginally". Argus reports that the report sees the world's production capacity increasing by 5mn b/d by 2026, compared with 2020. But "the historic collapse in demand has resulted in a spare production capacity cushion of a record 9mn b/d that could keep global markets comfortable in the near term". Wishful thinking. The IEA said that "To meet the growth in oil demand to 2026 in the IEA report's base case, supply needs to rise by 10mn b/d by 2026," the IEA said. "The Middle East, led by Saudi Arabia, is expected to provide half that increase, largely from existing shut-in capacity."

Oil prices are also getting some resistance from more reports of Iran and China thumbing their nose at the Biden administration openly ignoring sanctions on oil. There is some talk about that creating an issue for OPEC. Yet today it's really about Energy Information Administration data and the Fed. If the Fed gives us what we expect will be a dovish outlook, the oil will bounce. The IEA sell-off should be short-lived because usually, the IEA turns out to be wrong on their big picture calls. Yet they still move the market for hours or days sometimes.

The Energy Information Administration will move on refinery runs and gas demand! We know that prices at the pump have been rising but may ease off before they rise again for summer.

So may the road rise up to meet you. May the wind be always at your back. May the sunshine warm upon your face. The rains fall soft upon your fields, And, until we meet again, May God holds you in the palm of His hand. Happy Saint Patrick Day!

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