IEA: supply cuts and outages decrease oil production forecast
Unexpected outages in OPEC and non-OPEC countries have cut global oil supply by nearly 0.8 mbpd in May, dampening global production forecasts, said the International Energy Agency (IEA) on Tuesday, in its monthly Oil Market Report (OMR), a publication which provides a view of the state of the international oil market.
IEA’s OMR June report stated that the output suffered a first significant drop since 2013 and now stood at 590 kb/d below a year earlier. The report indicates that non-OPEC supply growth is expected to return in 2017 at a modest 0.2 mbpd, after declining by 0.9 mbpd in 2016.
OPEC crude output fell by 110 kb/d in May to 32.61 mbpd due to big oil sector sabotage in Nigeria. Iran is OPEC’s fastest growing supplier this year, after achieving pre-sanction levels of production in April this year, with a gain of 700 kb/d.
According to IEA, global oil demand grew in the first quarter of 2016 to 1.6 mbpd and for 2016 growth will now be 1.3 mbpd. In 2017 we will see the same rate of growth and global demand will reach 97.4 mbpd with non-OECD countries providing the most expected gains in both years.
Growth rate, said IEA, is slightly above the previous trend, mostly due to low crude oil prices.
With US driving season around the corner, OECD gasoline stocks stand above average levels. The Chinese also have a similar situation in their market. OECD commercial inventories, as stated in the report, increased from March levels by 14.4 mb to stand at 3,065 mb by end-April, an impressive 222 mb above one year earlier.
As far as refineries go, OMR reports that the seasonal ramp-up to the third quarter of 2016 is expected to be the largest on record, surging by about 2.3 mbpd quarter-on-quarter.