Oil Markets Weekly: The surplus is back

For all the disruption to global oil supply chains—from production and refining to shipping and trade—the oil market has arrived at a remarkable destination: a surplus. Recovering Middle Eastern flows, rising production elsewhere and weak demand have pushed global supply above consumption once again. We estimate the global oil market returned to a surplus of 1.1 mbd in September, widening to 1.4 mbd in October, nearly matching last year's average of 1.3 mbd. The surplus is most evident in crude and is showing up in both trade flows and inventories. Global crude imports averaged 43 mbd in September, up 0.5 mbd from a year earlier, before climbing to 44.9 mbd in October, an increase of 1.3 mbd year-over-year. The inventory data tells much the same story. In China, crude stocks bottomed at 1,179 million barrels in early October before rebounding to 1,211 mb, a build of 32 mb in just three weeks. South Korea has resumed replenishing its strategic petroleum reserves, lifting stocks from a l