The latest monthly oil market report published by the International Energy Agency (IEA) showed that in January world oil reserves reached the highest level since September 2021, increasing by 52.9 million barrels compared to December, to 7.8 billion barrels. The IEA added that a significant increase in oil reserves could provide a buffer later in the year when supplies will be "nowhere close" to matching demand, and China is expected to drive world oil demand to record levels.
The report showed that the increase in January was mainly caused by the growth of oil reserves in the OECD countries against the background of lower demand and the filling of storage facilities by European countries on the eve of a full embargo on Russian oil.
The IEA has left its forecast for global oil demand in 2023 at 102 million barrels per day. However, the IEA predicts a steady increase in demand in the second half of the year due to rebound in air traffic and a post-Covid-19 lockdown recovery in China. Demand is expected to grow by 710,000 barrels per day in the 2nd quarter and by 2.6 million barrels per day in the 4th quarter.
The IEA said matching the implied 2 million barrels per day year-on-year growth this year will be a challenge given the uncertainty over Russian output. The IEA forecasts the liquids supplies in 2023 at the level of 101.6 million barrels per day, which is 300,000 barrels per day more than in the previous forecast. The IEA also acknowledged that oil production in Russia remains stable, close to the pre-war level, and, of course, showed better results than predicted immediately after Russia's invasion of Ukraine.