Engine of global demand picking up steam

This week's energy outlook

  • Projected world petroleum and other liquids supply increases by 1.7 million barrels per day (bbl/d) in 2014 and 1.4 million bbl/d in 2015, with most of the growth coming from countries outside of the Organization of the Petroleum Exporting Countries (OPEC). The Americas, in particular the United States, Canada, and Brazil, will account for much of this growth.
  • Projected world liquid fuels consumption grows by an annual average of 1.3 million bbl/d in 2014 and 1.4 million bbl/d in 2015. Countries outside the Organization for Economic Cooperation and Development (OECD), notably China, drive expected consumption growth.
  • Non-OPEC supply growth contributes to an increase in global surplus crude oil production capacity from an average of 2.2 million bbl/d in 2013 to 3.8 million bbl/d in 2015.
  • Global unplanned supply disruptions reached nearly 3.2 million bbl/d by the end of 2013, but fell to 3.0 million bbl/d in January as some of Libya's oil production restarted. OPEC members continue to account for most of the global supply disruptions, averaging 2.3 million bbl/d in January. Supply disruptions present considerable uncertainty over the forecast period because the issues underpinning the disruptions in most countries remain unresolved.
  • EIA estimates that OECD commercial oil inventories at the end of 2013 totaled 2.61 billion barrels, equivalent to roughly 56 days of supply. Projected OECD oil inventories rise to 2.63 billion barrels by the end of 2014 and continue increasing to 2.64 billion barrels by the end of 2015.
  • EIA expects strong crude oil production growth, primarily concentrated in the Bakken, Eagle Ford, and Permian regions, continuing through 2015. Forecast production increases from an estimated 7.4 million bbl/d in 2013 to 8.4 million bbl/d in 2014 and 9.2 million bbl/d in 2015. The U.S. crude oil production forecast for both 2014 and 2015 was revised downward by 0.1 million bbl/d from last month's STEO because of indications that severe weather this winter has caused temporary slowdowns in completing new wells. The highest historical annual average U.S. production level was 9.6 million bbl/d in 1970.

Global equities responded favorable to Yellen’s comments as well as the positive macroeconomic data released during the overnight period. The EMI Global Equity Index increased by 1.15 percent over the last twenty four hours with all bourses in the Index gaining ground. The year to date loss has narrowed to 4 percent and is now well off of the worst levels of the year. Three of the ten bourses in the Index are now in positive territory for the year led by Canada a resource related economy… especially oil. Global equities have been a positive directional price driver for the oil complex as well as the broader commodity market so far this week.

Tuesday's API report was mildly bullish. Total crude oil stocks increased less than the expectations. The API reported a surprise draw in gasoline but a smaller draw in distillate fuel than what was expected. Total inventories of crude oil and refined products were about unchanged on the week.

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