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Global oil stockpiles to fall after Saudi cut says EIA

After the voluntary oil cut, Saudi Arabia's output for October, November, and December will be capped at nearly nine million bpd Reuters
Aramco has been selling crude oil to Vietnam, but has yet to make any investment in the country

Global oil inventories were expected to fall in the fourth quarter after Saudi Arabia extended output cuts this month, while US crude production is forecast to rise more than previously thought, the US Energy Information Administration (EIA) said in a monthly report on Tuesday.

World oil stockpiles were forecast to fall by 200,000 barrels per day in the fourth quarter, the EIA said, after Saudi Arabia’s voluntary crude production cut of one million bpd, which was due to expire at the end of September, was extended till the year’s end.

The EIA, meanwhile, raised its 2023 world oil demand growth forecast by 50,000 barrels per day (bpd) to 1.81 million bpd. The agency cut its oil demand growth estimate for 2024 by 250,000 bpd to 1.36 million bpd.

The decline in global oil inventories should increase the price of the international benchmark Brent crude contract to an average of $93 per barrel during the fourth quarter, up from the $86 average in August, the EIA said.

Brent was expected to ease to an average of $87 by the second half of 2024 as inventories rise, it added.

“High oil prices combined with uncertain economic conditions could lessen global demand for petroleum products through 2024,” said EIA administrator Joe DeCarolis in a statement.

In the US, crude output is seen rising 870,000 bpd in 2023 to a record 12.78 million barrels, up from last month’s forecast of an 850,000-bpd increase. In 2024, output is expected to rise by 380,000 bpd to 13.16 million bpd.

US total petroleum consumption is expected to rise by 100,000 bpd to 20.1 million bpd in 2023, less than previously forecast, the EIA said. In 2024, consumption is forecast to rise by 200,000 bpd to 20.3 million bpd.

The EIA reduced its forecast for US gasoline consumption in 2024 by 200,000 bpd to 8.7 million bpd. The decrease came after the US census bureau revised its population estimates for the country to include fewer people of working age and more people of retirement age, who tend to drive less, the EIA said.

US natural gas consumption is forecast to average a record 80.5 billion cubic feet per day in September, an increase of five percent from the same time last year. The increase follows elevated natural gas-fired electricity generation from strong US air-conditioning demand, as well as reduced generation from coal-fired plants, the EIA said.