The oil price rally has been relentless, but in their recent monthly report, the IEA noted that the tides may be turning. Their report notes, “The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon.” Although demand is rising quickly, oil supplies have been rising just as quickly, including the US’s post-hurricane rebound. Next year, US production will account for 60% of annual supply increases, assuming OPEC+ sticks to current plans.

From an inventory standpoint, the report noted that OECD inventories – representing fuel stocks in developed economies – fell in September, taking them to their lowest level since 2015 and 250 million barrels below the five-year average. They do hint that inventories may have loosened in October, though final data is still pending.

On the other hand, increased US spending could suggest increased demand in the future. Although President Biden’s $1 trillion infrastructure package is considered to support clean energy, in reality the construction and repairs will be done by fuel-consuming heavy equipment. It’s unclear exactly how much demand will change, but items such as “carbon offsets” allow the bill to be cleaner while still increasing fuel consumption.