Wednesday, October 26, 2016
Global oil supply rose by 0.6 MMbbld in September, according to the International Energy Agency’s (IEA) October Oil Market Report. Non-OPEC supply was up nearly 0.5 MMbbld on higher Russian and Kazakh flows and OPEC supply was at an all-time high. World oil output of 97.2 MMbbld was up 0.2 MMbbld from last year due to strong OPEC growth. Non-OPEC supply is forecast to drop by 0.9 MMbbld in 2016 before rebounding by 0.4 MMbbld in 2017.
Meanwhile, OPEC crude output rose by 160,000 bbld to a record 33.64 MMbbld in September as Iraq pumped at the highest level ever and Libya reopened ports. Supply from the cartel stood 0.9 MMbbld above 2015 due to robust Middle East output. OPEC has agreed to cut supply to between 32.5 MMbbld and 33 MMbbld, with details to be set by the end of November.
Oil demand is forecast to expand by 1.2 MMbbld this year, with a similar gain expected in 2017. Growth continues to slow, dropping from a five-year high in the third quarter of 2015 to a four-year low in the third quarter this year due to vanishing Organization for Economic Cooperation and Development (OECD) growth and a marked deceleration in China. The potential for colder weather should see growth rebound somewhat in the fourth quarter of 2016.
OECD commercial inventories fell for the first time since March, by 10 MMbbl in August due to a larger-than-seasonal decline in crude stockpiles. Preliminary data for September show crude stocks falling in both Japan and the U.S. Weighed down by autumn maintenance, global refinery throughput in the fourth quarter of 2016 is expected to decline seasonally by 1.1 MMbbld, up just 70,000 bbld year on year. Global throughput in 2016 is expected to grow year on year by just 220,000 bbld, the lowest annual growth rate in more than a decade, excluding the last economic recession.
Benchmark crude prices rose in September as market rebalancing continued and participants anticipated an OPEC supply cut. At the time of the release of IEA’s October Oil Market Report, front-month ICE Brent was trading at $53.05/bbl with front-month NYMEX West Texas Intermediate lower at $51.15/bbl.
Meanwhile, OPEC crude output rose by 160,000 bbld to a record 33.64 MMbbld in September as Iraq pumped at the highest level ever and Libya reopened ports. Supply from the cartel stood 0.9 MMbbld above 2015 due to robust Middle East output. OPEC has agreed to cut supply to between 32.5 MMbbld and 33 MMbbld, with details to be set by the end of November.
Oil demand is forecast to expand by 1.2 MMbbld this year, with a similar gain expected in 2017. Growth continues to slow, dropping from a five-year high in the third quarter of 2015 to a four-year low in the third quarter this year due to vanishing Organization for Economic Cooperation and Development (OECD) growth and a marked deceleration in China. The potential for colder weather should see growth rebound somewhat in the fourth quarter of 2016.
OECD commercial inventories fell for the first time since March, by 10 MMbbl in August due to a larger-than-seasonal decline in crude stockpiles. Preliminary data for September show crude stocks falling in both Japan and the U.S. Weighed down by autumn maintenance, global refinery throughput in the fourth quarter of 2016 is expected to decline seasonally by 1.1 MMbbld, up just 70,000 bbld year on year. Global throughput in 2016 is expected to grow year on year by just 220,000 bbld, the lowest annual growth rate in more than a decade, excluding the last economic recession.
Benchmark crude prices rose in September as market rebalancing continued and participants anticipated an OPEC supply cut. At the time of the release of IEA’s October Oil Market Report, front-month ICE Brent was trading at $53.05/bbl with front-month NYMEX West Texas Intermediate lower at $51.15/bbl.
