The June edition of Glenloch Energy's Oil Market Forecast ("OMF") (published on the 15th of June) sees the IEA in focus, or more specifically, its disconnection from reality.
The key points in this edition:
- Our assessment of the IEA’s roadmap concludes that it fails to provide a credible path to Net Zero by 2050, primarily because of the extent of its reliance on new technology.
- Our view is that the IEA’s roadmap was constructed in this way to make recommendations more acceptable to the signatories of the Paris Agreement, by downplaying the extent of the behavioral changes required to transition from fossil fuels.
- Given the response to the report over the last few weeks, this attempt appears to have been unsuccessful, with several G7 nations pushing back publicly on the report’s key recommendations. This sets the stage for a very contentious COP 26.
- We see the report as tacit admission by the IEA that the objectives of the Paris climate agreement are not achievable.
- Oil demand growth forecasts have been consistently robust for the second half of the year.
- We expect global crude storage to fall back to its long term average by the end of the year.
- Brent and WTI spot prices continue to rise with both benchmarks passing $70 / bbl this month.
- The IEA and EIA both predict a rebound in US oil production in 2022 as higher prices stimulate US onshore activity.
- US rig count continues to grow but shows no sign of acceleration, our own forecast sees a decline in US oil production next year.
Access Glenloch Energy's June OMF here.