Oil Supply & Demand

[dan_s]

IEA's Oil Market Report (keep in mind the volumes below include NGLs):

The comments below are from our friend John White, who is one of the sharpest energy sector analysts I know. Later today we are going to post the slides from his recent presentation on the EPG website. You definitely need to check them out.

Significant cuts on non-OPEC front outweigh modestly lower demand, resulting in a ~350 kb/d increase to the call on OPEC crude over the back half of the year and a 0.2 mb/d increase for the full year. Notwithstanding risk that OPEC setbacks could be short lived and the IEA’s optimism on China demand, this is a positive report for oil balances relative to expectations.

Demand: 2014 demand estimate slightly lowered; global supply drop led by OPEC. In this month's Oil Market Report, the IEA slightly lowered its 2014 global demand forecast to 92.2 MMbpd, equating to a year-over-year growth rate of 1.3 MMbpd. The 100 Mbpd reduction reflects a downward revision to expected Russian demand.

Supply: On the supply side, global supply fell by 1,200 Mbpd to 91.75 MMbpd in March, led by an 890 Mbpd fall in OPEC crude supplies, primarily due to lower production from Iraq, Saudi Arabia, and Libya.

Total OPEC crude production fell to 29.62 MMbpd in March, after reaching the 30 MMbpd level for the first time in five months in February. The call on OPEC crude and stock change was increased by 300 Mbpd to 30.2 MMbpd for the rest of 2014. The increase comes primarily as a result of a reduction in forecasted non-OPEC supply growth, which was trimmed by 250 Mbpd to 1.5 MMbpd for the year, primarily on forecasted reductions from the former Soviet Union.

For February, OECD total oil inventories dropped 6.5 MMBbls m/m to 2,567, largely due to the continuation of unusually cold weather in North America and destocking of inventories in Japan. Global refinery crude runs are set to fall by 2.0 MMbpd from February through April on planned seasonal plant maintenance.
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My take is that if WTI stays over $95/bbl for April & May, it will be very bullish for 2nd half of this year. Global demand for oil picks up from June to December. - Dan