IEA reports difference of 200M barrels in its inventories

(Bloomberg) — The International Energy News is trying to figure out where 200 million barrels of oil went.

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The adviser to energy-consuming nations said on Wednesday that global crude inventories plunged by more than 600 million barrels last year. That would be fine if it weren’t for the fact that according to their supply and demand estimates, the decline should only have been 400 million.

There is always a gap between the two, but the 200 million barrel discrepancy means the oil market could be tighter than previously thought. The difference could be the result of underreporting demand or overreporting production, the IEA said. Its monthly report is a benchmark for traders trying to assess the balance between supply and demand around the world.

“A hindsight shows the difficulty over the past two years in reliably analyzing and forecasting supply and demand,” the agency said on Wednesday. “The lessons learned will improve performance in 2022 and allow us to better understand our market.”

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While the balance between supply and demand may be one cause of the mismatch, there could be others as well. The agency uses satellite data to track oil reserves, for example, but that doesn’t extend to the barrels used to fill pipes or those stored in huge underground caverns.

There are also problems with the reports. While great emphasis is placed on the reserves of OECD nations, the IEA’s core reporting area, there are growing volumes outside the region that go unreported, particularly in China.

Also add a global pandemic that has transformed the dynamics behind oil consumption, and that tracking demand has become significantly more difficult.

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The IEA Goes Hunting for 200 Million Missing Barrels of Oil

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