Oil Market Tightening - Macro View

[dan_s]

The IEA released its monthly report on 4/13/2017, and said oil stocks across the OECD fell by 17.2 million barrels in March, as demand outpaced supply by about 200,000 b/d between January and March, but added that stocks are still 330 million barrels above the five-year average. Regarding non-OECD inventories, the agency said "a look at data from various sources shows stocks drawing in some non-OECD countries over 1Q 2017. Non-OECD stocks are thought to be roughly equal in size to OECD volumes, but there is far less data available about them." Most of the decline in non-OECD stocks likely came from Iran, where inventories of ultra-light condensate had been held at sea since the imposition of Western sanctions in 2012. The IEA said Iranian offshore stocks fell to 4 million barrels in March from 28 million barrels when sanctions were lifted in early 2016. Globally, oil held offshore fell to 58.4 million barrels in March from 82.6 million barrels at the end of 2016, the IEA said. "It can be argued confidently that the market is already very close to balance, and as more data becomes available this will become clearer. We have an interesting second half to come." Also on the supply front, the agency said global production fell by 755,000 b/d in March to 95.98 million b/d as OPEC and its partners complied with their joint deal to cut output by 1.8 million b/d in the first half of this year.

Regarding oil demand, the IEA trimmed its forecast for global oil demand growth in 2017 by 40,000 b/d to 1.32 million b/d. It warned this could prove optimistic given slowing consumption in the U.S. and developed Asian economies such as Australia, Japan and South Korea. "New data shows weaker-than-expected growth in a number of countries including Russia, India, several Middle Eastern countries, Korea and the U.S., where demand has stalled in recent months," the agency said.

On 4/12/2017 Reuters reported that OPEC cut oil output in March by more than pledged under a supply reduction deal and said oil inventories had fallen in February, suggesting that its effort to clear a supply glut that has weighed on world oil prices is succeeding. Compliance in March by the 11 OPEC members with output targets under the supply cut deal averaged 104% percent, according to a Reuters calculation based on production figures OPEC published. This is in line with earlier figures seen by Reuters on 4/11/2017. OPEC is considering whether to extend the supply cut deal beyond June and most members, including Saudi Arabia and Kuwait, are leaning towards this if all producers, including non-OPEC also agree, OPEC sources told Reuters last month.

On 4/12/2017, ex-Iranian President Mahmoud Ahmadinejad submitted his name for registration as a candidate in Iran's presidential election in May, with Reuters crediting state media reports. Although the move by the former hardline president was seen as an attempt to bolster the candidacy of an ally, it was also a challenge to the authority of Iran's Supreme Leader Ayatollah Ali Khamenei, who had ordered him not to run. President Hassan Rouhani, a moderate who engineered Iran's 2015 nuclear deal with world powers that secured a removal of international financial and trade sanctions against Tehran, is expected to seek re-election but faces a stiffchallenge from conservatives who opposed the deal.

[bill_taylor]

Is The View from Houston posted on the log on page current? Regards Bill

[dan_s]

I just told Sabrina to post it.

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