NEWS

IEA: Global Oil Supply Will Outpace Demand Throughout 2019

Global oil supply will outpace demand throughout 2019, the International Energy Agency (IEA) forecasted in its latest Oil Market Report.

Since midyear, oil supply had increased sharply with gains in the Middle East, Russia, and the US more than compensating for falls in production in Iran, Venezuela, and elsewhere, IEA said.

New data show that the pace has accelerated, and this higher output, in combination with Iranian sanctions waivers issued by the US and steady demand growth, implies a stock build in this year’s fourth quarter of 700,000 b/d, according to IEA.

Already, oil stocks of countries in the Organization for Economic Cooperation and Development have increased for 4 continuous months, with products back above the 5-year average.

Storage tanks are filling up as global oil supply far outpaces demand, prompting talk of a possible 1 million b/d production cut by members of the Organization of Petroleum Exporting Countries and certain other non-OPEC producers.

Brent prices hit a 4-year high of more than $86/bbl at the beginning of October but have since fallen back to below $70/bbl. Brent and West Texas Intermediate futures curves have flipped to contango. Except for gasoline and naphtha, product prices did not match the drop in crude prices.

SUPPLY
Since May, when US sanctions were announced, and Vienna Agreement producers began to unwind cuts, global oil output has soared by a net 1.8 million b/d.

The US, with its relentless growth, has provided more than 1 million b/d, Saudi Arabia has ramped up by 620,000 b/d, and Russia has increased by 445,000 b/d. Such record-setting rates have more than made up for declines from Iran (-480,000 b/d), Venezuela (-140,000 b/d), and seasonal declines in Canada (-200,000 b/d) and Kazakhstan (-100,000 kb/d).

In October, world oil output of 100.7 million b/d was 2.6 million b/d higher than a year ago. Non-OPEC producers accounted for much of the increase, although OPEC oil supply was up 380,000 b/d from a year ago.

Crude oil production from OPEC rose to 32.99 million b/d—the highest level since July 2017—as record levels from the UAE and Saudi Arabia more than made up for a further decline in Iran and Venezuela. Meantime, in the short term, supply from Iran could hold up better than expected after the US granted waivers to eight countries, including major buyers China and India.

“Next year, there is expected to be even less need for OPEC oil due to relentless growth in non-OPEC supply,” IEA said, adding that it had cut its forecast for demand for OPEC crude by 300,000 b/d to 31.3 million b/d in 2019.

For 2019, the agency raised its forecast for oil output growth from non-OPEC countries to 2.4 million b/d this year and 1.9 million b/d next year vs. its previous estimate of 2.2 million b/d in 2018 and 1.8 million b/d in 2019.

The US will lead output growth, IEA forecasts, estimating total US oil supply will rise by 2.1 million b/d this year and another 1.3 million b/d in 2019 from a current record of more than 11 million b/d.

DEMAND
In its monthly report, the agency left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million b/d and 1.4 million b/d, respectively, as weaker economy is largely offset by lower oil prices.

Oil demand is slowing in several non-OECD countries as the impact of higher year-on-year prices is amplified by currency devaluations and slowing economic activity.

Non-OECD oil consumption should increase by 950,00 b/d in 2018, and the pace will accelerate to 1.1 million b/d in 2019. Notably, IEA’s non-OECD demand forecast for 2019 has been revised down by 165,000 b/d compared to a month ago.

Asia remains the main source of growth, contributing 900,000 b/d in 2018 and 820,000/d in 2019, with China and India the dominant markets. IEA expected total oil demand growth in China to be 495,000 b/d in 2018, followed by a slower rate in 2019 of 380,000 b/d. Indian oil demand growth has more than doubled in 2018 to 255,000 b/d, although IEA expected a modest slowdown in 2019 to 215,000 b/d.

OECD demand is expected to increase by 355,000 b/d in 2018, slowing to 285,000 b/d in 2019..OECD Americas oil demand is projected to increase by 445,000 b/d in 2018, supported by harsh weather conditions in the first quarter of this year, as well as booming industrial activity and the start-up of petrochemical projects in the US.

OECD Europe’s demand is less robust, and, after growth of 230,000 b/d year-over-year in this year’s first quarter, there were declines of 100,000 b/d and 65,000 b/d in the second and third quarter.

For the year, demand is set to decline by 5,000 b/d on very weak gas oil and naphtha deliveries, but a more favorable price environment is expected to support growth of 145,000 b/d in 2019. OECD Asia Oceania oil demand will post small declines in both 2018 and 2019.

Source: OGJ

Poll

Subscribe To Newsletter


NNPC MONTHLY OIL AND GAS REPORT JULY 2020T


CLICK IMAGE TO DOWNLOAD FULL REPORT IN PDF

NPC Monthly Report
Click to comment

Contact Us!

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

To Top