Global Oil Market

[dan_s]

In its monthly report released on Thursday, the IEA increased its global demand growth outlook for 2018 by 100,000 barrels per day (bpd) to 1.5 million bpd.

As I have posted here many time, IEA has a habit of starting the year with a very conservative demand forecast. Then they gradually raise it. Even their final "estimate" for the year in December proves to be too low. My SWAG is that global oil demand growth will be close to 2.0 million bpd YOY in 2018. Demand of over 100 million bpd will soon be in the rearview mirror. That will probably happen in Q2.

Highlights of the IEA "Oil Market Report" dated 3-15-2018:

Demand is expected to increase by 1.5 mb/d in 2018 to 99.3 mb/d, a 0.1 mb/d upward revision compared to last month's forecast. Global oil demand is estimated at 97.8 mb/d in 2017, unchanged from last month. < Note that 2017 is still an "estimate".

Strong early data contributed to an upward revision of 240 kb/d in our outlook for OECD demand growth in 2018. The switch to natural gas in Pakistan and Iraq's power sectors is responsible for a downward revision of 150 kb/d to non-OECD demand.

Global oil supply in February eased to 97.9 mb/d and was up by 0.7 mb/d on a year earlier due to higher non-OPEC output. Strong growth in the US is expected to boost this year's non-OPEC expansion to 1.8 mb/d compared to 760 kb/d in 2017.

OPEC crude oil production edged lower in February to 32.1 mb/d, led by losses in Venezuela and the UAE. The call on OPEC crude rises steadily to 32.6 mb/d in 2H18, 480 kb/d higher than current output.

OECD commercial stocks rose in January for the first time in seven months to reach 2 871 mb. However, the 18 mb increase was only half the usual level. The surplus to the five-year averaged fell to 53 mb. Cushing crude stocks reached their lowest level in three years.

Global crude oil prices fell in the first half of February, before stabilising later in the month. The ICE Brent futures curve remains in backwardation. However, spreads are narrowing. Brent prices have averaged close to $67/bbl this year.

Global refining throughput in 1Q18 slowed from 4Q17's record levels by 0.9 mb/d. It will ramp up to a new record in 2Q18 at 81.8 mb/d. We assume refining throughput will only partially meet the seasonal demand increase, with inventories filling the gap. < Already low refined product inventories will draw down further in Q2.


You should all read this carefully: https://www.iea.org/oilmarketreport/omrpublic/

NOTE THAT STARTING IN Q2 2018 DEMAND FOR OIL EXCEEDS SUPPLY.

[dan_s]

Read the Summary here: http://www.celsiusenergy.net/p/crude-oil-storage.html

[dan_s]

Wall Street Journal: Oil Demand Set to Rebalance Surge in U.S. Shale

Global oil demand will likely grow faster than expected this year, partly offsetting a surge in U.S. shale production and keeping the market in balance, the International Energy Agency said Thursday. In its closely watched monthly oil-market report, the IEA predicted the world’s appetite for crude would increase by 1.5 million barrels a day to reach 99.3 million barrels a day in 2018, an upward revision of 90,000 barrels. The uptick is expected to be driven by robust demand in industrialized nations, including Europe, the U.S. and Japan, the agency said. “The market rebalancing is clearly moving ahead with…supply and demand becoming more closely aligned,” the report noted. The IEA, a Paris-based organization that advises governments and corporations on energy trends, struck a more optimistic tone than last month, when it warned that U.S. shale production could overwhelm global demand and undermine the oil market’s fragile recovery.