Recent weakness in oil prices over a potential recession contradict the outlook for rising demand and tight supply this year, the International Energy Agency said Tuesday in its latest monthly oil market report.
The IEA raised its forecast for 2023 global oil demand growth by 200K bbl/day to 2.2M bbl/day, and now sees total demand of 102M bbl/day, ~100K more than it forecast a month ago.
China's recovery after the lifting of COVID-19 curbs has surpassed expectations, IEA said, with demand reaching a record 16M bbl/day in March, likely accounting for nearly 60% of this year's global demand growth, together with increases in India and the Middle East offsetting sluggish demand in Europe and North America.
The IEA also noted Russian oil exports rose in April to 8.3M bbl/day, the highest since the invasion of Ukraine, with nearly 80% of shipments going to China and India.
But U.S.-led price caps meant revenue was down nearly two-thirds from a year earlier, and the IEA said Russia did not deliver its announced 500K bbl/day production cut and may be boosting volumes to make up for lost revenue.
On Tuesday, front-month Nymex crude (CL1:COM) for June delivery settled -0.3% to $70.86/bbl, and July Brent crude (CO1:COM) closed -0.4% to $74.91/bbl, the fourth loss in five sessions for both benchmarks.
Crude oil fell last week for the fourth consecutive week, a slump that saw WTI crude shed 15%.