The latest oil market report from the IEA 12 October 2017

  • Following very strong year-on-year demand growth of 2.2 mb/d in 2Q17, the pace slowed to 1.2 mb/d in 3Q17, reflecting relatively weak July and August data and the impact of hurricanes in September. Our forecast of global demand growth remains unchanged at 1.6 mb/d in 2017 (or 1.6%) and 1.4 mb/d in 2018 (or 1.4%).
  • Global oil supply rose 90 kb/d in September to 97.5 mb/d as non-OPEC output edged higher. Output stands 620 kb/d higher than last year. In 2017, non-OPEC supplies are expected to grow by 0.7 mb/d, followed by a 1.5 mb/d increase in 2018.
  • OPEC crude output was virtually unchanged in September as slightly higher flows from Libya and Iraq offset lower supply from Venezuela. Output of 32.65 mb/d was down 400 kb/d on a year ago. Compliance with supply cuts for the year-to-date is 86%.
  • OECD commercial stocks fell 14.2 mb in August from an upwardly revised July. The surplus over the five-year average fell to 170 mb. Global stocks are likely to have drawn in 3Q17 as reductions in floating storage and the OECD outweighed net builds in China.
  • Benchmark crude prices rose by $2-4/bbl in September versus August, marking the third straight month of gains. Middle distillate prices increased almost twice as fast as crude, reflecting lower refinery throughputs and higher demand.
  • For 4Q17, our refinery throughput forecast edges up to 80.9 mb/d, up 0.1 mb/d quarter-on-quarter. Our first forecast for January 2018 implies 1.2 mb/d year-on-year growth, although runs decline by 0.4 mb/d from December to just under 82 mb/d.
  • Our global crude and product balances show inventories drawing in 2017 by 0.1 mb/d and 0.2 mb/d, respectively. For next year, the crude and product markets look broadly balanced, assuming OPEC holds output steady at around current levels.

The kicker for all this is that they assume that OPEC levels stay at their current levels. The full report is here.

Ryan Littlestone

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