Carlyle's Jeff Currie believes that investors are significantly underestimating an oil surplus, according to a report.

• Jeff Currie of Carlyle stated at the annual APPEC conference in Singapore that concerns about a supply glut in the markets are "completely overplayed."
• Despite China's slowing economy, the demand in the country is not as stale as commonly believed, according to the chief strategy officer.

Carlyle's chief strategy officer Jeff Currie stated that global markets are overestimating an oil supply glut.

According to Currie, concerns about a supply glut in the markets are "completely overplayed" because of excessive pessimism about Chinese demand amid flat U.S. crude oil production.

Last week, U.S. crude prices reached their lowest point since June 2023 due to tepid demand from the world's largest crude importer, despite a perceived oversupply in the market.

The statement made at APPEC by the speaker was that the weaknesses in demand for China are being overstated due to base effects and destocking, despite China's crude oil imports in 2023 reaching a record high.

The transition component, which involves moving trucks into LNG, and the economic weakness are the factors that led to a 500,000 barrels per day decline. However, he stated that the worst of this transition is likely behind us.

The International Energy Agency reports that China's oil demand has been decreasing due to a decline in industrial inputs. Preliminary data suggests that this trend will continue in July, as China's crude oil imports dropped to their lowest level since 2022 during strict lockdowns in the country. Additionally, China's August crude oil imports fell by 7%.

The production of black oil in the U.S., one of the world's leading crude oil producers, has remained unchanged this year, according to Currie. Black oils include crude oil, fuel oil, furnace oil, asphalt, and tar, while white oils include gasoline and kerosene.

Natural gas liquids production in the U.S. is at a record high. However, it's important to note that liquids are not the same as oil. In fact, when you examine oil production in the U.S., you'll see that it's remained flat this year, according to Currie.

The market is overestimating the flood in oil supply, resulting in record short positions, as he stated.

In June, Carlyle announced that it would acquire a portfolio of gas-weighted assets with an initial production of 47,000 barrels of oil per day. The company struck a $945 million deal with Energean to acquire its assets in Egypt, Italy, and Croatia, according to Reuters.

Supply outstrips demand

Other industry experts have a different view on the issue of oversupply in the crude market, contrary to Currie's assessment.

According to Torbjörn Törnqvist, CEO of Gunvor, we are likely producing more oil on critical products than we are consuming, and this imbalance is expected to deteriorate in the upcoming year.

In 2025, OPEC+ is predicted to increase production for the first time in three years, according to Jim Burkhard, head of research for oil markets, energy, and mobility at S&P Global, amid compounding oversupply concerns.

The alliance postponed plans to increase production by 180,000 barrels per day in October by two months, which was part of a program to return 2.2 million barrels per day to the market.

If OPEC+ does not increase production, the world will still have more than 5 million idle oil drills, according to Burkhard.

As a result, there will be more idle capacity, which will put downward pressure on prices, according to him.