Commodities Buzz: Observed oil inventories rebound by 52 million barrels in October, marking first increase since June, says IEA
International Energy Agency or IEA stated in its latest monthly update that world oil demand is forecast to fall by 2.7 mb/d in 2026, to 102.3 mb/d, before rebounding by 2 mb/d in 2027. The year-on-year decline is set to ease to 2.7 mb/d in 4Q26, from an average 4.4 mb/d over 2Q26 and 3Q26. LPG/ethane and naphtha will account for around 80% of the increase next year as supply chains normalise, while transport fuels will see very modest gain, as high prices accelerate electrification and fuel efficiencies across the global car fleet.
Following an increase of 3 mb/d in September, global oil supply rose by a further 2.3 mb/d to 105.4 mb/d in October on lofty Gulf exports despite ongoing attacks on energy infrastructure and tankers. The higher flows underpin a sharp upward revision to 4Q26 supply, while 2027 has been lowered due to constrained Iranian shipments. After a decline of 4.8 mb/d in 2026, oil supply is expected to rebound by 6.6 mb/d, reaching an average of 108.1 mb/d in 2027.
Global refinery runs fell by 1.3 mb/d m-o-m to a seasonal low of 81.3 mb/d in October and are forecast to rebound to 84.7 mb/d in December. Global throughputs are projected to rebound by 2.5 mb/d to 84.3 mb/d in 2027, following an average annual decline of 2.2 mb/d in 2026. Margins weakened almost everywhere in October as record freight costs hit Asian refiners. US refiners benefited from cheaper crude, but lower gasoline prices weighed on profits.
Observed oil inventories rebounded by 52 mb (+1.7 mb/d) in October, the first increase since June, as oil on water surged by 86 mb to its highest level since January on robust crude exports from the Gulf. On-land stocks continued to fall, however, and remain at their lowest level since at least 2016. OECD total stocks declined by 47 mb, with industry inventories down 41 mb. Observed global stocks have fallen by a cumulative 462 mb since the start of the war.
IEA noted that North Sea Dated crude oil prices tumbled by 32%, dropping from a high of $136/bbl in early October to $93/bbl at the time of writing, as a sustained recovery in Gulf exports eased market tightness. Diesel prices also fell by 11% in Europe over the same period but, at close to $180/bbl, remained 77% above pre-war levels. Freight rates for moving crude from the Middle East to Asia held near record levels.
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