IEA reduces global oil demand forecast again on slower economic growth
The International Energy Agency’s Oil Market Report (OMR) for October continues to reduce its forecast of global oil demand for 2014 by 200,000 b/d from the previous month, to 92.4 million b/d, in line with lower expectations of economic growth and the weak recent trend.
The International Energy Agency’s Oil Market Report (OMR) for October continues to reduce its forecast of global oil demand for 2014 by 200,000 b/d from the previous month, to 92.4 million b/d, in line with lower expectations of economic growth and the weak recent trend. Annual demand growth for 2014 is now projected at 700,000 b/d, rising tentatively to 1.1 million b/d in 2015, as the macroeconomic backdrop improves.
In its October World Economic Outlook, the International Monetary Fund (IMF) cut its forecast of economic growth for 2014 and 2015 for the third time this year to 3.3% and 3.8% (vs. July’s 3.4% for 2014 and 4% for 2015) respectively, led by revisions for Europe, China, Brazil, and Russia.
Global supply rose 910,000 b/d in September to 93.8 million b/d, 2.8 million b/d higher compared with last year, as supply from the Organization of Petroleum Exporting Countries swung back to growth and amplified robust non-OPEC supply gains of 2.1 million b/d.
OPEC crude oil output surged to a 13-month high of 30.66 million b/d in September, led by Libya’s continued recovery and higher Iraqi flows, the report stated. Downward revisions to global demand outlook cut the “call on OPEC crude and stock change” by 200,000 b/d for 2015 to 29.3 million b/d. The “call” declines seasonally by 1.5 million b/d from this year’s fourth quarter to first-quarter 2015.
September non-OPEC supply increased by 495,000 b/d month-on-month to 56.7 million b/d, as many producers ramped up following seasonal maintenance. The US and UK were the largest contributors to the rebound, the report said.
Pressured by abundant supply, faltering demand, and a strong US dollar, oil prices fell for a third straight month in September and sank below $90/bbl in October, the report said. ICE Brent was last at a near 4-year low of $88.7/bbl, down more than 20% since June. NYMEX WTI was at $85.2/bbl.
Global refinery crude demand hit new highs in August, near 79 million b/d, with OECD runs leading the uptick. With the onset of seasonal plant maintenance through October, global crude runs are set to dip to 77.5 million b/d this quarter from 78.1 million b/d in the third quarter, with year-on-year growth rising over the same period to 1.4 million b/d from 900,000 b/d. As crude price declines outpaced those of products, refinery margins extended upward trend in September and into October.
OECD commercial total oil inventories surged by 37.7 million bbl over August to 2,698 million bbl, narrowing the 5-year average deficit to 38.1 million bbl at end-August from 67.1 million bbl one month earlier.