EIA Reports Possible Oil Supply Deficits Coming in 2025
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A recent study by the U.S. Energy Information Administration (also known as the ‘EIA’) revealed that global oil demand might outpace supply next year, reversing an earlier forecast of a surplus.
The shift occurred after OPEC and its allies, known as OPEC+, decided last month to extend most of their significant oil output cuts into the next year. This producer group has been limiting production since late 2022 to support the oil markets amid weakening demand growth, high interest rates, and record U.S. output.
If the market experiences a deficit, refiners will have to draw oil from inventories to satisfy demand. Furthermore, the EIA stated that global oil inventories will decline by 700,000 bpd in the second half of 2024, following a reduction of 500,000 bpd in the first half.
On the other hand, oil stocks have been performing fairly well in 2024 so far. Year-to-date, Exxon Mobil Corp (XOM:US) has so far had a solid performance with a 10.64% rise YTD. Most recently, Representative Ro Khanna reported two purchases of XOM shares of up to $50,000 and $100,000 respectively.
Elsewhere, ConocoPhillips (COP:US) announced its acquisition of Marathon Oil in an all-stock transaction valued at $22.5 billion, which includes approximately $5.4 billion in debt. Rep. Jonathan Jackson invested between $15,000 and $50,000 in COP on April 2, 2024. Prior to this, Representatives Michael McCaul, Josh Gottheimer, and John Curtis were seen selling COP shares from late 2023 to early 2024. Recently, ConocoPhillips sued the Department of the Interior, requesting a judge to overturn new regulations imposed by the Biden administration. The company argued these rules "hinder and obstruct petroleum production" across millions of acres in an Alaskan reserve.
Other oil companies that hold a significant position in the U.S. markets include Chevron Corp (CVX:US), Shell PLC (SHEL:US), and TotalEnergies SE (TTE:US).
According to an in-depth study by the EIA, petroleum has consistently been the most widely consumed energy source in the United States since 1950, majorly used in transport. Despite the rise in electric vehicle usage, petroleum continues to be the main fuel used. Volatility is rife in the sector amidst a bullish performance while ongoing acquisitions and legal actions are bringing about another side to the picture.
