Heating oil futures in the United States have decreased to approximately $2.45 per gallon, a drop from their peak levels observed in June. This decline comes as a result of a smaller-than-expected reduction in distillate inventory levels, which has alleviated concerns about severe shortages during the winter season. Over the week ending November 7th, distillate stockpiles fell by only 0.64 million barrels, significantly less than the anticipated 2.0 million barrel reduction, according to the latest report from the Energy Information Administration (EIA).
Concurrently, the International Energy Agency (IEA) has raised alarms regarding an increasing imbalance in the oil market. It has adjusted its forecasts, projecting demand to rise by 788,000 barrels per day this year and 770,000 barrels per day next year. However, supply is anticipated to grow at a faster rate, increasing by 3.1 million barrels per day this year and 2.5 million barrels per day next year. This suggests a potential oversupply, with surpluses of approximately 2.4 million barrels per day for the current year and an expected 4.0 million barrels per day in the following year. The IEA has also moderated its stance on when peak oil demand might occur.
Adding to the downward pressure on prices are forecasts for increased US oil output and additional EIA data indicating a further build-up in inventory levels, which heighten concerns about a potential global oil surplus.
