Global oil demand growth is slowing at a faster pace than initially predicted, according to the newly released IEA Oil Market Report (OMR) for September. For 2016, a gain of 1.3 million bpd is expected – a downgrade of 0.1 million bpd on the IEA’s previous forecast due to a more pronounced 3Q16 slowdown. Momentum eases further to 1.2 million bpd in 2017 as underlying macroeconomic conditions remain uncertain.
Meanwhile world oil supplies fell by 0.3 million bpd in August, dragged lower by non-OPEC. At 96.9 million bpd, global oil output was 0.3 million bpd below a year ago, but near-record OPEC supply just about offset steep non-OPEC declines. Non-OPEC supply is expected to return to growth in 2017 (+380 000 bpd) following an anticipated 840 000 bpd decline this year.
OPEC crude production edged up to 33.47 million bpd in August – testing record rates as Middle East producers opened the taps. Kuwait and the UAE hit their highest output ever and Iraq lifted supplies. Output from Saudi Arabia held near a record, while Iran reached a post-sanctions high. Overall OPEC supply stood 930 000 bpd above a year ago.
The anaemic outlook for refining throughput extends further amid downward revisions to the IEA's 2H16 forecast. Refinery runs in 2016 are set to grow at the lowest rate in a decade.
OECD total inventories built by 32.5 million bbls in July to a fresh record of 3111 million bbls. As refinery activities reached a summer peak, crude oil inventories refused to decline until an exceptional storm-related draw hit the US in late August.
Oil prices rallied in early August, rising from four-month lows near US$42/bbl to briefly above US$50/bbl amid peak summer demand for crude oil, which is expected to lead to the first quarterly crude stock draw in more than two years. At the time of writing, Brent futures had retreated to around US$48.45/bbl while WTI was at US$46.35/bbl.
Adapted from press release by Rosalie Starling
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