Oil futures surged in mid‐June by $5/bbl to a nine-month high of more than $115/bbl for Brent as Islamist forces gained ground in Iraq, but later reversed their gains on confidence that Baghdad’s southern fields would remain untouched and improved prospects for a recovery in Libyan exports. Brent last traded at $108/bbl, WTI at $102/bbl.
OPEC supplies were virtually unchanged in June at 30.03 million barrels per day (mb/d), as lower Iraqi production offset gains in Saudi Arabia, Iran, Nigeria and Angola. The ‘call’ on OPEC for 2H14 was cut by 350 000 barrels per day (350 kb/d) to 30.6 mb/d on improved non‐OPEC supply and lower demand, and is forecast to dip to 29.8 mb/d in 2015 from 29.9 mb/d in 2014.
Non‐OPEC supply is forecast to grow by 1.2 mb/d in 2015, down slightly on 2013 and 2014 forecast levels. Global supplies were largely unchanged month‐on‐month in June, at 92.6 mb/d, but 995 kb/d higher than a year ago. Annual non‐OPEC output growth of 1.7 mb/d more than offset OPEC declines of 765 kb/d.
Global oil demand growth is forecast to accelerate to 1.4 mb/d in 2015 from 1.2 mb/d in 2014, as macroeconomic conditions improve. The estimate of 2014 demand has been trimmed by 130 kb/d to 92.7 mb/d following weaker‐than‐expected mid‐year economic data.
Global refinery crude runs dipped below year‐earlier levels in June, for the first time since October. Planned and unplanned outages, capacity rationalisation and weak margins cut runs by 0.9 mb/d on the year, to 76.8 mb/d. The 2Q14 estimate has been lowered by 0.3 mb/d, to 76.2 mb/d, while the 3Q14 forecast is unchanged, at 77.8 mb/d.
OECD commercial oil inventories built by a steeper‐than‐usual 44.2 mb in May, to 2 639 mb. Their deficit to the five‐year average narrowed to 69.6 mb from a revised 106.1 mb at end‐April. Refined products covered 29.0 days of demand at end‐May, up 0.4 days on the month. Preliminary data show that OECD stocks rose by 8.3 mb in June.
The Oil Market Report (OMR) is a monthly International Energy Agency publication which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead. To subscribe, click here.
Source: IEA, 2014