The global oil demand growth forecast for 2014 has been curtailed since last month’s report to a more modest 1 million b/d, according to the International Energy Agency’s most recent Oil Market Report.
The revision was primarily due to lower-than-expected second-quarter deliveries and downgraded macroeconomic outlook from the International Monetary Fund (IMF). Demand growth is forecast to accelerate in 2015 to 1.3 million b/d as the economy improves.
Global oil supply in July averaged 93 million b/d, up 230,000 b/d from a month ago and 840,000 b/d from a year ago.
With a boost from Saudi Arabia and a tentative recovery in Libyan output more than offsetting losses in Iraq, Iran, and Nigeria, production from members of the Organization of the Petroleum Exporting Countries rose by 300,000 b/d to 30.44 million b/d in July, a 5-month high.
The “call” on OPEC crude and stock change is expected to average 30.8 million b/d in this year’s fourth quarter. The call is set at 29.9 million b/d for all of 2015, down from the 30 million b/d estimate for 2014.
Non-OPEC production in July fell 170,000 b/d month-on-month to 56.2 million b/d, on declines in Brazil, Mexico, and Russia, as well as attacks that took down output in Colombia and Yemen, IEA said.
OECD industry stocks in June posted their sixth consecutive monthly build, rising 13.8 million bbl to 2,671 million bbl at month’s end, the highest level since September 2013.
“Inventories’ deficit to the 5-year average narrowed to 42.1 million bbl from 52 million bbl at end-May. The deficit now stands at its smallest since October 2013 and remains centered in OECD Europe,” IEA said.
Diverging trends of global refinery activity were observed in June, with a counter-seasonal fall in OECD throughput contrasting with record-high runs in several key non-OECD countries, according to the latest OMR.
“OECD refinery crude oil intake plunged by 1.9 million b/d from a year earlier. In contrast, throughput levels in China, Brazil, Russia, and Saudi Arabia hit record highs. Global refinery runs are now estimated at 76.5 million b/d for second quarter 2014, up 1.3 million b/d year-on-year, and 0.2 million b/d higher than in last month’s report,” IEA said.
As plentiful supply and weak OECD refinery runs in June offset concerns about escalating conflicts in Iraq, Libya, and Ukraine, crude prices fell in July and early August.
On hopes that US air strikes would lower disruption risks in Iraq, ICE Brent was below $105/bbl at the time of report writing, $10/bbl off the mid-June peak. NYMEX WTI was about $98/bbl.