THE global crude oil price’s bumpy 2016 ride looks set to to continue for some time to come judging by recent market reports for the International Energy Agency (IEA), OPEC and news out of China.
IEA releases Oil Market Report for September
In its monthly oil market report for September, the IEA said global oil demand growth is slowing at a faster pace than initially predicted.
The IEA report now forecasts demand growth of juts 1.3 million barrels per day (mb/d) for 2016, a downgrade of 0.1 mb/d on its previous forecast due to a more pronounced slowdown in the third quarter of 2016.
According to the IEA, this slowdown eases further to 1.2 mb/d in 2017 as underlying macroeconomic conditions remain uncertain.
However, the IEA also reported that world oil supplies fell by 0.3 mb/d in August, dragged lower by non-OPEC. At 96.9 mb/d, global oil output was 0.3 mb/d below a year ago, but near-record OPEC supply just about offset steep non-OPEC declines. Non-OPEC supply is expected to return to growth in 2017 (+380 kb/d) following an anticipated 840 kb/d decline this year.
The IEA found that OPEC crude production edged up to 33.47 mb/d in August – testing record rates as Middle East producers opened the taps. Kuwait and the UAE hit their highest output ever and Iraq lifted supplies. Output from Saudi Arabia held near a record, while Iran reached a post-sanctions high. Overall OPEC supply stood 930 kb/d above a year ago.
According to OPEC’s September report, world oil demand growth in 2016 was revised slightly higher by around 10 thousand b/d from the August Monthly Oil Market Report (MOMR), primarily as a result of better-than-expected performances by OECD Europe and Asia Pacific in the first half of 2016. In OPEC’s eyes, world oil demand growth is now pegged at 1.23 mb/d, with total global consumption at 94.27 mb/d.
OPEC’s forecast for world oil demand growth 2017 has been kept relatively unchanged from the August
MOMR at 1.15 mb/d, with total global consumption forecast at around 95.42 mb/d.
OPEC said the US is projected to remain the main contributor to anticipated OECD oil demand growth during 2017.
One of the most signicant factors in the oil demand figures for the third quarter is China, where S&P Global Platts reportes that the apparent oil demand for July contracted 5.4% from the same month last year to 10.75 million barrels per day (b/d).
S&P Global Platts reported that refinery throughput in July averaged 10.72 million b/d. This was a 2.5% rise year over year but represented a 4.6% decline from June.
Net imports of key oil products in July averaged just 35,000 b/d, with total exports hitting a record high volume of 862,000 b/d.
Imports, averaging 897,000 b/d, were at their lowest since January 2015.
Over the first seven months of 2016, China’s apparent oil demand growth declined one per cent to an average 11.12 million b/d. This compares with positive growth of 8.8% over the same period last year.