„Our estimate for global oil demand growth in 2019 has been cut for a second consecutive month.It is now projected at 1.2 mb/d.In 1Q19, global growth was only 0.3 mb/d, and for 2Q19 the estimate is 1.2 mb/d. We expect higher growth in 2H19 at 1.6 mb/d.
- In 2020, global oil demand growth will rise to 1.4 mb/d, supported by solid non-OECD demand and petrochemicals expansion. The IMO switch will result in major changes to bunker fuel demand, sharply increasing gasoil demand from 4Q19.
- Non-OPEC supply growth will accelerate from 1.9 mb/d this year to 2.3 mb/d in 2020. The US leads the gains, but solid growth also comes from Brazil and Norway. In May, global oil supply eased by 0.1 mb/d to 99.5 mb/d, down 2.8 mb/d from the November peak.
- The call on OPEC crude drops to 29.3 mb/d in 2020, 650 kb/d belowthe May output level.OPEC supply fell to its lowest since 2014 as Iranian supply plunged due to sanctions and on lower Saudi and Nigerian output. OPEC’s effective spare capacity was 3.2 mb/d.
- Global refinery throughput in May was at its lowest level in two yearson maintenance and unplanned outages. By August, refinery runs could be more than 4 mb/d higher.
In 2019-20, the global refining industry will add 3.5 mb/d of new capacity.
- OECD oil stocks rose by 15.8 mb in April to 2 883 mb, and are slightly above the five-year average. In days of forward demand, stocks amount to 59.9 days, 1.6 days below the average. Preliminary data for May show a significant build in US crude stocks.
- Benchmark crude futures prices have fallen by 20% since late April partly due to concerns about the health of oil demand. However, the Brent forward curve remains in backwardation suggesting tight prompt markets. Gasoline cracks were pressured by abundant supplies.
The demand (summary)
For the second consecutive month, we have revised down our 2019 oil demand growth forecast, this time by 100 kb/d, to 1.2 mb/d.
The bulk of the revision is in the OECD. We received lower March consumption statistics for the Americas, which drove our overall OECD 1Q19 growth estimate down by 360 kb/d versus last month’s Report.
Global oil demand is now estimated to have risen by just 250 kb/d year-on-year (y-o-y) in 1Q19, the lowest annual growth registered since 4Q11, when the price of Brent crude oil averaged $109/bbl.
Oil consumption fell in the OECD by 600 kb/d y-o-y and rose in non-OECD countries by 850 kb/d. A global economic slowdown, lower growth in the petrochemical industry and warmer than normal weather in the northern hemisphere were contributory factors.
One should also bear in mind that annual growth in 1Q18 amounted to a significant 1.9 mb/d. This also contributed to low growth on a y-o-y basis.“