Crude Prices Down as IEA Report Points to Record Stockpiles
OMR Highlights (13 July 2016)
- Global oil supplies rose by 0.6 mb/d in June to 96 mb/d after outages curbed OPEC and non-OPEC supplies in May. World production was 750 kb/d below last year as higher OPEC output only partially offset non-OPEC declines. Non-OPEC supplies are set to drop by 0.9 mb/d in 2016, to 56.5 mb/d, before rising 0.2 mb/d in 2017.
- Robust European demand supported 2Q16 global demand growth at around 1.4 mb/d y-o-y, momentum that will be roughly matched through the year as a whole. A modest deceleration is foreseen in 2017, as growth eases to 1.3 mb/d taking average deliveries up to 97.4 mb/d.
- Crude oil prices eased from an early June peak above $52/bbl, and traded within a $45-$50/bbl range. Growing uncertainty over the global economy and a stronger dollar weighed, but the downside was limited by further declines in US production and inventories.
- OPEC crude output rose by 400 kb/d in June to an eight-year high of 33.21 mb/d, including newly re-joined Gabon. Saudi Arabia ramped up to a near-record rate of 10.45 mb/d and Nigerian flows partially recovered from rebel attacks. Middle East producers sustained record levels, building market share and pushing OPEC’s total output 510 kb/d above a year ago.
- OECD commercial inventories built by 13.5 mb in May to end the month at a record 3 074 mb. Preliminary information for June suggests that OECD stocks added a further 0.9 mb while floating storage has continued to build, reaching its highest level since 2009.
- May global refinery throughput plunged by almost 1 mb/d from April and stood 1.5 mb/d lower year-on-year, as heavy outages took a toll in many regions. This lowered the 2Q16 estimate for global refinery intake, to 78.5 mb/d – the first y-o-y drop in three years. Our forecast for 3Q16 throughput is more steady at 80.95 mb/d.