The major oil market reports were all released this week, bringing updates from the EIA, OPEC, and the IEA. Every month, these three massive reporting agencies release a report on the state of global energy markets, including forecasts of supply and demand. So what does each agency say about the current market situation?
EIA: The EIA’s Short-Term Energy Outlook reflects falling supply and demand in 2023. The agency reduced its 2023 production forecast by 0.6 MMbpd due to OPEC+’s cuts as well as slow supply growth in the US. On the demand side, consumption was lowered 0.5 MMbpd due to reduced GDP expectations. Notably, the forecast included a special Winter Fuels Outlook, which notes that energy costs will rise this winter due to colder temperatures and higher energy prices. Specifically, household expenditures for heating will increase by 19% for natural gas users, 12% for heating oil users, and 8% for electric users.
IEA: The Oil Market Report shows a similar demand cut for 2023, with the agency cutting global consumption by 470 kbpd. The IEA sees the net effect of OPEC+’s cuts as half of the headline amount, decreasing supply by 1 MMbpd. Taking a global perspective, the agency notes that Russian exports have fallen moderately month-over-month; however, Europe has not meaningfully diversified its energy purchases away from Russia yet. That means embargoes could be more painful when they take place in two months. A key line from their analysis: “higher oil prices may prove the tipping point for a global economy already on the brink of recession.”
OPEC: The Monthly Oil Market Report from OPEC read as a justification of the cartel’s recent production cut. The group expects demand to fall in the future, making the cuts a proactive measure to keep prices from falling too low for comfort. As NPR wrote, “gloom oozes” from the report, which shows a variety of risk factors for the economy in the future.