OPEC's Oil Market Outlook Report - June 14

[dan_s]

TPH Morning Notes:

OPEC Oil Market Outlook
Cartel supply down 240mbpd in May; 2019 demand forecast revised 70mbpd lower to +1.14mmbpd

OPEC published its monthly oil market report yesterday highlighting (1) no change to non-OPEC '19 supply growth (following last month's downward revision), (2) ~240mbpd decline in May OPEC production, and (3) 70mbpd downward revision to '19 demand growth. On the supply side, non-OPEC liquids growth forecast remained unchanged at +2.14mmbpd y/y, with downward revisions in the US (-13mbpd), Norway (-24mbpd), and Brazil (-23mbpd) offset by a notable upward revision in China (+62mbpd). As per secondary sources, OPEC crude production was down 236mbpd m/m in May, largely driven by a steep decline in Iran output (-227mbpd following expiration of waivers on 2nd May). Saudi Arabia (-76mbpd), Nigeria (-92mbpd), and Venezuela (-35mbpd) also finished lower m/m, somewhat offset by production uplift in Iraq (+94mbpd) and Angola (+74mbpd). On the demand side, OPEC reduced its '19 growth forecast by 70mbpd to +1.14mmbpd y/y as a result of all OECD regions seeing a sluggish start to the year. OECD Americas (soft March in US and Canada) and OECD Asia Pacific (major slowdown, petrochemical shutdowns in Q1'19) were revised down 15mbpd and 13mbpd respectively for Q1'19; OECD Europe oil growth was also adjusted lower for Q1'19 following a slow start to the year in Germany, Italy, and Turkey. Additionally, China demand growth forecast remained unchanged at +0.35mmbpd y/y. Finally, the report also suggested that upcoming project startups, trade disputes, and overall economic and geopolitical instability will be considered when the group meets later this month to discuss potential extension of cuts.