Global oil demand growth lowered for third month in a row

The IEA released their latest Oil Market Report this morning and for the third month in a row they lowered their forecast for oil demand growth based on a slowing global economy. Following are the highlights of the report.

Oil futures tracked latest economic developments amid the worsening European debt crisis, which triggered downward price moves throughout September. Prices partially recovered on renewed optimism that European leaders would address euro-zone financing issues, with WTI last trading at $84.50/bbl and Brent near $108/bbl.

Global oil demand is revised down by 50 kb/d for 2011 and by 210 kb/d for 2012 with lower-than-expected 3Q11 readings in the non-OECD and a downward adjustment to global GDP growth assumptions. Global GDP growth is now seen at 3.8% in 2011 and 3.9% in 2012 with significant downside risks. Demand estimates stand at 89.2 mb/d in 2011 (+1.0 mb/d y-o-y) and 90.5 mb/d in 2012 (+1.3 mb/d).

Global oil supply fell by 0.3 mb/d to 88.7 mb/d in September from August, due to non-OPEC outages. Non-OPEC supply projections are trimmed by 0.3 mb/d for 4Q11 and by 0.2 mb/d for 2012, with annual growth averaging 0.2 mb/d, to 52.8 mb/d, and 0.9 mb/d to 53.6 mb/d for 2011 and 2012 respectively. OPEC NGL output averages 5.9 mb/d in 2011 and 6.3 mb/d in 2012.

OPEC crude oil supply nudged down to 30.15 mb/d in September, with lower Saudi Arabian and Nigerian output partly offset by resumed Libyan supply. Output there reached 350 kb/d in early October and capacity is assumed at 600 kb/d by end-year. The 4Q11 ‘call on OPEC crude and stock change’ is adjusted up by 0.3 mb/d to 30.8 mb/d on lower non-OPEC supply, with the 2012 ‘call’ unchanged at 30.5 mb/d.

OECD industry oil stocks fell counter-seasonally in August by 3.4 mb to 2 692 mb, or 58.4 days of forward cover. Preliminary September data suggest a further 12.7 mb decline in OECD industry stocks and a drop in short-term floating storage. OECD stocks since July fell below the five‑year average for the first time since June 2008.

Global crude runs estimates for 3Q11 and 4Q11 are revised down by 50 kb/d and 75 kb/d respectively versus last month. Lower-than-expected Asian throughputs are partly offset by continued robust US runs. Global throughputs now average 75.5 mb/d in 3Q11 and 75.3 mb/d in 4Q11. Meanwhile, OECD refinery rationalization continues.

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