International Energy Agency (IEA) Monthly Oil Market Report
The springtime slump in oil markets accelerated in May in the wake of the deepening Eurozone crisis, mounting concern over a slowdown in Chinese growth and rising global oil supplies. Futures prices were off 20% from peak 2012 levels, with Brent last trading at around $97.50/bbl and WTI at $83.50/bbl.
A muted economic backdrop underpins forecast demand growth of 0.82 mb/d in 2012, resulting in average demand of 89.9 mb/d. A lower GDP sensitivity this month illustrates downside demand risks, but upside potential exists too, amid uncertainty over summer power sector oil demand and non-OECD stockpiling.
Global oil supply rose by 0.2 mb/d to 91.1 mb/d in May. Non-OPEC liquids increased by 0.2 mb/d to 53.1 mb/d and by 1.0 mb/d versus year ago. In 2012 rising North American supply more than offsets record-low North Sea output, as well as outages in the Sudans, Syria, and Yemen, taking non-OPEC supply growth to 0.7 mb/d.
OPEC crude supply edged lower in May, off 20 kb/d, to 31.87 mb/d, with reduced output from Saudi Arabia and Iraq offset by higher production in Angola, Nigeria, and Libya. The call on OPEC crude and stock change’ in 2H12 is around 1 mb/d higher than the 1H12 level, at 30.9 mb/d. OPEC 2012 NGL supply rises 0.4 mb/d to 6.2 mb/d.
OECD industry oil inventories rose by 17.3 mb in April, to 2 643 mb. OECD commercial oil stocks have now narrowed the apparent deficit to the five-year average in absolute terms, while remaining 1.9 days above the five-year average. May preliminary data indicate a 20.1 mb increase in OECD industry inventories.
World refinery crude demand is set to surge seasonally by 2.8 mb/d between April’s low and August, as maintenance winds down. New and returning capacity in Asia and Europe also contribute, while ramp up at Motiva’s expanded US plant could be delayed. Global crude runs rise from 74.3 mb/d in 2Q12 to 75.9 mb/d in 3Q12.