IEA Oil Market Report
Demand estimates in 2017 and 2018 are roughly unchanged at 97.8 mb/d and 99.1 mb/d respectively. A 40 kb/d downward revision to 2016 demand, however, pushed up the 2017 growth to 1.6 mb/d, while our growth estimate for 2018 remains unchanged at 1.3 mb/d.
- The slowdown in 2018 demand growth is mainly due to the impact of higher oil prices, changing patterns of oil use in China, recent weakness in OECD demand and the switch to natural gas in several non-OECD countries.
- Global oil supply in December eased by 405 kb/d to 97.7 mb/d due mostly to lower North Sea and Venezuelan output. Production was steady on a year ago as non-OPEC gains of nearly 1 mb/d offset declines in OPEC.
- A plunge in Venezuelan supply cut OPEC crude output to 32.23 mb/d in December, boosting compliance to 129%. Declines are accelerating in Venezuela, which posted the world’s biggest unplanned output fall in 2017.
- Rapid US growth and gains in Canada and Brazil will drive up non-OPEC supply by 1.7 mb/d in 2018, versus last year’s 0.7 mb/d increase. US crude supply will push past 10 mb/d, overtaking Saudi Arabia and rivalling Russia.
- OECD commercial stocks declined for the fourth consecutive month in November, by 17.9 mb, with a large fall in middle distillates. Preliminary data for December suggest a further fall of 42.7 mb.
- Global crude oil markets saw an exceptionally tight 4Q17 as the large draw in OECD crude stocks coincided with a decline in Chinese implied crude balances. The combined draw is estimated at 1 mb/d.
- Benchmark crude prices climbed to a three-year high in early January, reflecting falling stocks, supply issues in the North Sea and Libya, and geopolitical tensions. However, physical markets were softer and oil products failed to match the increases.
- Global refining throughput hit a record in 4Q17 at 81.5 mb/d, instead of falling seasonally. The US returned to pre-hurricane highs in December and China’s refiners ran at their highest ever quarterly level. Margins suffered further from both product stock builds and the rally in crude oil prices.