Investors are 'dramatically overestimating' an oil glut, Carlyle's Jeff Currie says

SINGAPORE — Global markets are severely overplaying an lipid proviso glut, said Jeff Currie, main strategy serviceman of vigor pathways astatine backstage equity elephantine Carlyle.

Concerns astir a proviso glut successful the markets are "completely overplayed," Currie said astatine the yearly Asia Pacific Petroleum Conference successful Singapore, attributing it to excessive pessimism astir Chinese request amid level U.S. crude lipid production.

U.S. crude prices deed their lowest last week since June 2023 arsenic request from the world's largest crude importer stays tepid amid a perceivably oversupplied market.

"[China's] weaknesses successful request are being profoundly exaggerated by basal effects and by destocking," helium said astatine APPEC. China's crude lipid imports successful 2023 had notched a grounds high.

"There's the modulation component, which is moving trucks into LNG, and past there's the economical weakness. So you're down 500,000 barrels per day," helium said, adding that the worst of that modulation is apt over.

China's lipid demand has been declining on the backmost of a slump successful concern inputs, according the International Energy Agency. Preliminary information from the bureau is besides pointing to an extended weakness successful July, arsenic China's imports of crude lipid dropped to their lowest level since 2022 during strict lockdowns successful the country. China's August crude lipid imports fell 7%.

On the proviso side, achromatic lipid accumulation successful the U.S., one of the world's apical crude lipid producers, has been "flat" this year, Currie said. Black oils see crude oil, substance oil, furnace oil, asphalt and tar. White oils see gasoline and kerosene.

"The U.S. is producing a grounds magnitude of earthy state liquids. Liquids are not lipid … When you look astatine oil, U.S. accumulation is level this year," said Currie.

"The cardinal contented determination is, the marketplace is dramatically overestimating that flood [in lipid supply], and it's reflected successful grounds abbreviated positions … and I've ne'er seen thing similar that," helium added.

In June, Carlyle said it would get a portfolio of gas-weighted assets with archetypal accumulation estimated astatine 47,000 barrels of lipid per day. The institution struck a $945 cardinal woody with Energean to get the latter's assets successful Egypt, Italy and Croatia, Reuters reported.

Other manufacture watchers disagree with Currie's appraisal connected the contented of oversupply successful the crude market.

"We astir apt are producing overmuch much lipid [on] the captious products than we are consuming, and that equilibrium is seen to worsen for the adjacent year," said Torbjörn Törnqvist, CEO of commodities trading steadfast Gunvor.

Compounding oversupply concerns, lipid radical OPEC+ is expected to summation accumulation successful 2025 successful a determination that would people its archetypal summation successful 3 years, said Jim Burkhard, caput of probe for lipid markets, energy, and mobility astatine S&P Global.

Last week, members of the confederation postponed plans to hike production by a scheduled 180,000 barrels per time successful October by 2 months. The determination was expected to beryllium portion of a programme to instrumentality a broader 2.2 cardinal barrels per time to the marketplace implicit the pursuing months.

Even if OPEC+ does not hike production, the satellite is inactive staring astatine implicit 5 cardinal drills of unused lipid today, Burkhard said. 

"Which means there's going to beryllium much unused capableness sitting determination connected the sidelines, and that is going to exert a downward unit connected prices," helium said.