Oil Supply / Demand

[dan_s]

From Morgan Stanley report issued 1/6/2014:

Outlook for Crude Oil is Stable [My take is that we will see a dip in price Q2 but WTI should average over $90]

Continued supply outages, rising
geopolitical risks, a weaker-than-expected
USD, and investor positioning have
supported the Brent market in 4Q13. While
these issues will likely continue into early
2014, with supply returning, weak refinery
margins and anemic demand, we find little
upside for oil prices.
Supply
 Supply disappointed again in 2013, with
outages continuing to crop up around the
world. Geopolitical tensions remain an
issue in the Mideast, as unrest in Egypt
and Syria continues. However, the market
expects outages to ease as crude supply
is set to grow materially, especially in
non-OPEC countries.
 Non-OPEC: Continued growth from the
US and new projects starting up in
countries such as Brazil and Kazakhstan
should help non-OPEC supplies improve
significantly.
 OPEC: Outages have affected OPEC
production, especially in Libya, where
shut-ins peaked over 1.0 mmb/d.
Outages are affecting Iraqi as well, with
pipeline sabotage in the north.
Demand
 We see a return to trend-like oil demand
growth in 2014 as our economists
continue to expect GDP to improve.
However, we expect demand to trough in
2Q14 on rising refinery maintenance.
 OECD: US demand looks to be
improving, with gasoline the surprising
standout. Export demand out of the US
into Europe and Latin America remains
strong as well. Europe remains the
weakest link, while OECD Asia is seeing
some softness in the product demand
side as well.
 Non-OECD: While the economic outlook
for the non-OECD has become more
murky, it is still set to drive global demand
growth in 2014. Despite a slowdown in
China from our initial expectations, we still
model Chinese demand growth leading
the non-OECD.