Global Oil Market is TIGHT
Posted: Mon Oct 15, 2018 8:00 am
On October 12 Reuters reported oil markets look "adequately supplied for now" after a big production increase in the last six months, but the industry is coming under strain, the IEA on Friday. The IEA said in its monthly report that the world's spare oil production capacity was down to 2% of global demand, with further falls likely. "This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy," the Paris-based organisation said.
OPEC, Russia and others such as U.S. shale companies had increased production sharply since May, the IEA said, raising global output by 1.4 million b/d. Overall, OPEC had boosted production by 735,000 b/d since May as Middle East Gulf producers such as Saudi Arabia and the UAE more than compensated for declining output in Venezuela and Iran, which is facing U.S. sanctions next month.
Supply from Iran during September dropped to a two-and-a-half year low, the IEA said, as customers continued to cut back in the run-up to new sanctions, which start on Nov. 4. Iranian output fell to 3.45 million b/d, it said, down 180,000 b/d month-on-month. Iranian oil exports in September fell to 1.63 million b/d, down 800,000 b/d from recent 2Q18 peaks, the agency estimated. "The decline may deepen significantly ahead of U.S. sanctions and subsequently as final cargoes are delivered," said the IEA, which advises major oil consumers on energy policy.
But the outlook for world oil consumption is also faltering, the IEA said as it cut its forecast of global oil demand growth by 0.11 million b/d for both this year and next to 1.28 million b/d and 1.36 million bpd respectively. "This is due to a weaker economic outlook, trade concerns, higher oil prices," it said.
"The increase in net production from key suppliers since May of approximately 1.4 million b/d, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million b/d in 2Q 2018 and look likely to have done the same in 3Q 2018, lends weight to the argument that the oil market is adequately supplied for now," the IEA said.
On October 12 Reuters reported China's daily crude oil imports in September hit their highest level since May, customs data showed on Friday, as independent refiners looked to shore up their inventory ahead of winter. Shipments into the country last month stood at 9.05 million b/d, up from 9.04 million b/d in August and marking their third straight monthly rise, according to numbers from the General Administration of Customs. Total crude imports over the first nine months of the year climbed 6% from the same period in 2017 to 8.98 million b/d, the customs data showed.
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Any action by the U.S. against Saudi Arabia in response to the killing of the journalist, will cause much higher oil prices.
OPEC, Russia and others such as U.S. shale companies had increased production sharply since May, the IEA said, raising global output by 1.4 million b/d. Overall, OPEC had boosted production by 735,000 b/d since May as Middle East Gulf producers such as Saudi Arabia and the UAE more than compensated for declining output in Venezuela and Iran, which is facing U.S. sanctions next month.
Supply from Iran during September dropped to a two-and-a-half year low, the IEA said, as customers continued to cut back in the run-up to new sanctions, which start on Nov. 4. Iranian output fell to 3.45 million b/d, it said, down 180,000 b/d month-on-month. Iranian oil exports in September fell to 1.63 million b/d, down 800,000 b/d from recent 2Q18 peaks, the agency estimated. "The decline may deepen significantly ahead of U.S. sanctions and subsequently as final cargoes are delivered," said the IEA, which advises major oil consumers on energy policy.
But the outlook for world oil consumption is also faltering, the IEA said as it cut its forecast of global oil demand growth by 0.11 million b/d for both this year and next to 1.28 million b/d and 1.36 million bpd respectively. "This is due to a weaker economic outlook, trade concerns, higher oil prices," it said.
"The increase in net production from key suppliers since May of approximately 1.4 million b/d, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million b/d in 2Q 2018 and look likely to have done the same in 3Q 2018, lends weight to the argument that the oil market is adequately supplied for now," the IEA said.
On October 12 Reuters reported China's daily crude oil imports in September hit their highest level since May, customs data showed on Friday, as independent refiners looked to shore up their inventory ahead of winter. Shipments into the country last month stood at 9.05 million b/d, up from 9.04 million b/d in August and marking their third straight monthly rise, according to numbers from the General Administration of Customs. Total crude imports over the first nine months of the year climbed 6% from the same period in 2017 to 8.98 million b/d, the customs data showed.
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Any action by the U.S. against Saudi Arabia in response to the killing of the journalist, will cause much higher oil prices.