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UBS less bearish than IEA over oil outlook

Published 13-06-2024, 03:04 pm

Investing.com - The International Energy Agency published a bearish outlook for the oil market in a report on Wednesday, but UBS sees a “more benign” supply/demand outlook.

The IEA published its Oil 2024 report on Wednesday, and forecast global oil demand peaking by 2029 and beginning to contract the following year. 

With ongoing capacity additions, the agency looked for surplus global capacity to climb to "unprecedented levels by 2030", seeing as much as 8 million barrels a day (b/d) of spare capacity by 2030, up from 6 million b/d currently, which could potentially weigh on prices through the end of the decade.

The IEA's outlook for oil demand is very similar to UBS’s view, the Swiss bank said, in a note dated June 12, with demand likely to peak in 2029 followed by a long plateau. 

The agency’s peak demand forecast of 105.6 million b/d in 2029 is very close to UBS’s 105.8 million b/d forecasts, but the bank said its outlook diverges more materially on the supply side. 

The IEA forecasts supply capacity additions of 6 million b/d over 2023-30, which far outpaces demand growth of 3.2 million b/d over the same period,  and is well above UBS’s estimate of around 2.5 million b/d.

The Paris-based agency is more bullish on several producers for 2030 such as the U.S., Canada or Qatar, UBS added.

“We see a more benign supply/demand outlook ourselves, because of lower non-OPEC+ supply, likely partly because we use a lower long-term oil price ($75/bbl Brent by 2027), leaving for OPEC+ to raise production gradually,” said UBS.

At 05:25 ET (09:25 GMT), the Brent Oil Futures contract traded 0.6% at $82.08 a barrel.


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