IEA Forecasts Fastest Oil Demand Growth In Two Years

The International Energy Agency, which advises most major economies on energy policy, forecast that global oil demand will climb this year by the most in two years amid stronger-than-expected consumption in Europe and the U.S. although it was unclear just how this will offset recently fading demand by the two biggest marginal consumers, China and India. The IEA reported that global oil demand grew very strongly in Y/Y in Q2 2017, by 2.3mmb/d, or 2.4%, and increased its estimate for demand growth in 2017 by 100,000 barrels a day to 1.6 million a day, or 1.7%. The IEA has now raised its 2017 oil-demand growth forecast for three months in a row.

The agency observed that the re-balancing of oversupplied world markets continues with OPEC supplies falling for the first time in five months as reported yesterday, and inventories of refined fuels in developed nations subsiding toward average levels. In August, global oil supply fell by 720 kb/d due to unplanned outages and scheduled maintenance, mainly in non-OPEC countries. OECD commercial stocks were unchanged in July at 3 016 mb, when they normally increase.

“Demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” the Paris-based agency said in its monthly report.

The IEA also said that the impact of Hurricane Harvey on global oil markets is “likely to be relatively short-lived,” according to Bloomberg. Although the oil market “coped relatively well” with the disruption caused by this year’s storms, the damage to U.S. facilities will still be felt, according to the report. The country’s production was curbed by about 200,000 barrels a day in August and 300,000 a day in September.

Meanwhile local stockpiles were at “comfortable” levels before the storm hit, while releases from government reserves and plentiful imports from Europe allayed any shortage. Stockpiles of refined fuels in developed nations were close to their five-year average in July, and could fall to or below this level “very soon,” according to the IEA. Crude oil inventories were steady in the same month, when they typically increase.

“Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly,” the agency said.

IEA also noted that OPEC boosted its production cut compliance last month to 82% from 75% Its 10 partners fully delivered on their pledged cutbacks for the first time since the agreement started in January, as Russia and Kazakhstan conducted seasonal maintenance work at oilfields, the IEA said.

Still, if OPEC keeps output at current levels the group is unlikely to reduce stockpiles “dramatically” either this year or even in 2018, Neil Atkinson, the head of the IEA’s oil markets and industry division, told Bloomberg in a television interview, suggesting that another OPEC production extension is likely inevitable.

Comments

LawsofPhysics Five Star Wed, 09/13/2017 - 08:55 Permalink

...and yet the USSA is still a very large net importer.Again, let me remind all the stupid fucks out there that it is a fool's errand to discuss the "price" of anything in the absence of a mechanism for true price discovery!Want to know what the "price" of something will be? So long as you are accepting fiat currency then you need to ask a central banker/financier!!!

In reply to by Five Star

Tod E. Tosspot Wed, 09/13/2017 - 07:30 Permalink

Oil demand this year will climb the most in 2 years? That reminds me of the early SNL Weekend Update: keeping America informed for over a fiftieth of a century!

NoDebt Wed, 09/13/2017 - 07:34 Permalink

If you would all just buy into the "coordinated global recovery" narrative and stop asking so many questions things would work out just fine.  Stop being such Negative Nancys and BELIEVE!  If you believe hard enough, it will be true.  If this fails, it will be your fault. 

silverer Wed, 09/13/2017 - 07:41 Permalink

"Forecasts Fastest Oil Demand Growth In Two Years"

Heard in the background: "Hey, whatever you can say to get those oil prices up. The bank called again this morning".

Tugg McFancy Wed, 09/13/2017 - 07:41 Permalink

Ignore the forecast, read the rest of the report and stocks are coming down. Floating storage below 5 yr avg. OECD stocks continually trending down. As with most of these things it will be ignored until the very last moment, then the price will go stupid all at once.

big tex Wed, 09/13/2017 - 09:41 Permalink

Those of you doubting the demand, here are the FACTS from US EIA:2009 - 85.586 MBBL/Day2010 - 89.173 MBBL/Day2011 - 89.903 MBBL/Day2012 - 91.108 MBBL/Day2013 - 92.310 MBBL/Day2014 - 93.503 MBBL/Day2015 - 95.420 MBBL/Day2016 - 96.989 MBBL/DayAnticipated2017 - 98.413 MBBL/Day2018 - 100.017 MBBL/Day

big tex Wed, 09/13/2017 - 10:32 Permalink

US consumption is around 16-17 MBBO/DayShipping industry to bring all your stuff to Walmart is another 9-10 MBBO/Day and increasingAlot of the increases Y/Y comes from India and China Many people only look to their own street corner and dont truly understand the worldly view of things.