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

The International Energy Agency (IEA) released its monthly oil market report. The report suggests an easing oil market. Here are the key highlights,

Global supplies:

  • Global oil supplies are rising fast, however, in November, the production declined by 360,000 barrels per day in November on a monthly basis.
  • According to IEA, oil supplies are rising fast. Non-OPEC supply growth is expected at 2.6 million barrels per day in 2018, which is 0.4 million barrels per day higher than the previous forecast and 1.5 million barrels per day in 2019, which is 0.1 million barrels more. The demand growth would be led by the United States.
  • Global supplies are higher than last year by 2.4 million barrels per day, as of November.   

OPEC supplies:

  • According to IEA’s calculations, OPEC production reached 33.03 million barrels per day in November, as lower supplies from Iran and Venezuela got offset by rising in UAE, Libya, and Saudi Arabiya.
  • Since May, OPEC supplies have increased by 0.96 million barrels per day.

Global demand:

  • IEA maintained its global oil demand growth forecast for 2018 to 1.3 million barrels per day and 1.4 million barrels per day for 2019. IEA expects that weaker oil price would compensate for a weaker economy.
  • The majority of the demand growth is expected to come from emerging markets. However, the growth is weakening in some emerging markets. IEA revised non-OECD growth down by 165,000 barrels per day.
  • For lowering the forecast, it cited a weaker economic outlook, trade concerns, higher oil prices, and a revision to Chinese data.
  • OECD demand will grow by 0.4 million barrels per day in 2018, led by the United States, whereas non-OECD demand growth will be a million barrels per day led by China and India.

Global inventories:

  • On the inventory side, the IEA report shows that OECD commercial stocks rose by 5.7 million barrels in October, completing the fourth consecutive monthly rise.
  • OECD commercial stocks are currently at 2,872 million barrels.
  • In the third quarter of 2018, stocks increased by 58.1 million barrels (630 kb/d), the largest gain since 2015.
  • According to IEA, OECD holdings are higher than the 5-year average.

WTI is currently trading at $50.5 per barrel and Brent at $9 per barrel premium to WTI.

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