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Oil in Global Economy Series: Key highlights from IEA’s January MOMR

Today, International Energy Agency released its monthly oil market report, which remains quite bullish. The report suggests a tighter oil market. Here are the key highlights,

Global supplies:

  • Global oil supply eased by 0.405 million barrels per year to 97.7 million barrels per day, due to North Sea outage and declining production in Venezuela. However, according to IEA, the non-OPEC production is up 1 million barrels per day compared to a year ago.
  • IEA forecasts non-OPEC supply increase of 1.7 million barrels per day in 2018, up 0.1 million barrels from the last forecast.
  • U.S. crude supplies are forecasted to pass 10 million barrels per day, surpassing Saudi Arabia and rivaling Russia.  

OPEC supplies:

  • According to IEA’s calculations, a plunge in Venezuelan supply reduced OPEC’s crude output to 32.23 million barrels per day in December, boosting compliance to 129%. Declines are accelerating in Venezuela, which posted the world's biggest unplanned output fall in 2017.
  • OPEC registered a fifth consecutive monthly decline in production.

Global demand:

  • IEA estimates that global oil demand reached 97.8 million barrels per day in December 2017 and forecasts 1.3 million barrel per day increase in 2018, which would push global demand to 99.1 million barrels per day.

Global inventories:

  • On the inventory side, IEA report shows that OECD commercial stocks declined for the fourth consecutive month in November, by 17.9 million barrels, with a large fall in middle distillates. Preliminary data for December suggest a further fall of 42.7 million barrels.
  • According to IEA, the global crude oil markets saw an exceptionally tight 4Q17 as the large draw in OECD crude stocks coincided with a decline in Chinese implied crude balances. The combined draw is estimated at 1 million barrels per day.

 

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