Global oil demand growth is forecast to slow to 1.2 million barrels per day (mb/d) in 2016, from an average 1.4 mb/d this year, according to the International Energy Agency’s (IEA’s) Oil Market Report for July, although strong consumption is expected in non-OECD Asia.
World oil demand growth appears to have peaked in the first quarter at 1.8 mb/d and will continue to ease throughout the rest of 2015 and into 2016 as temporary support fades.
Global oil supply surged by 550,000 barrels per day (550 kb/d) in June, on higher output from both OPEC and non-OPEC producers. At 96.6 mb/d, world oil production was an impressive 3.1 mb/d higher than a year earlier, with OPEC crude and natural gas liquids accounting for 60% of the gain. Non-OPEC supply growth is expected to grind to a halt in 2016, as lower oil prices and spending cuts take a toll.
OPEC crude supply rose by 340 kb/d in June to 31.7 mb/d, a three- year high, led by record high output from Iraq, Saudi Arabia, and the United Arab Emirates. OPEC output stood 1.5 mb/d above the previous year. The “call on OPEC crude and stock change” for 2016 is forecast to rise by 1 mb/d, to 30.3 mb/d.
OECD industry inventories hit a record 2 876 mb in May, up by a steep 38 mb. Product holdings led the buildup and by month’s end covered 30.7 days of forward demand. Global supply and demand balances suggest that the rate of global stock increases quickened rapidly to 3.3 mb/d during the second quarter.
Robust margins spurred stronger-than-expected OECD refinery runs, lifting second-quarter global throughput estimates to 78.7 mb/d. Global refinery throughputs are forecast to increase by a further 0.7 mb/d in the third quarter, with annual gains shifting to the non-OECD. New capacity startups in 2015 and 2016 will put margins under pressure.