“The high concentration of oil at about $ 70 a barrel has spurred conversation about a new supercycle and an impending supply deficit. Our data and analysis suggest otherwise,” the IEA said in its monthly report.
“For starters, oil inventories still seem broad compared to historical levels despite a steady decline … At the top of the stock cushion, a large amount of spare production capacity has accumulated as a result of OPEC + supply limits, “he said.
The Organization of the Petroleum Exporting Countries and its allies, a group called OPEC +, largely maintained production limits this month, galvanizing the market and causing some investors to predict a supercycle: a large multi-year price hike.
“The prospect of stronger demand and continued containment of OPEC + production point to a sharp decline in inventories during the second half of the year,” the Paris-based energy watchdog said.
“At the moment, however, there is more than enough oil in tanks and underground to keep global oil markets adequate.”