FY2019 Demand Growth is Revised Higher by OPEC
In its latest Monthly Oil Market Report, OPEC estimated oil demand will increase by 1.65M b/d in 2018 to an average of 98.85M b/d. Demand growth was revised higher by 25K b/d compared to last month’s assessment, mainly to account for robust OECD economic data in 1Q18 as well as better-than-expected data from several non-OECD regions such as India and Latin America.
Demand for OPEC crude is estimated at 32.7M b/d throughout the year, down 0.3M b/d from last year’s level. This is because non-OPEC supply in 2018 is projected to grow by 1.72M b/d y-o-y to 59.62M b/d. This is up 0.01M b/d from last month’s estimate, as upward revisions in 1Q18 oil supply forecasts for the US, Argentina, Colombia and China offset downward adjustments to Canada, Mexico, Norway, UK and Brazil. OPEC supply in 2018, including both NGLs and crude oil, is forecast to grow by 0.19M b/d y-o-y to an average of 38.42M b/d.
Finally, OPEC preliminary data for March showed OECD commercial inventories dropped 12.7M b/d m-o-m to 2.83B bbls. This is just 9M bbls above the 5-year average, but is still 258M bbls above January-2014 levels.
By mid-afternoon in London, ICE Brent was trading at $78.11/bbl, up $0.99/bbl from the end of last Friday’s trading day. The ICE Brent/WTI spread stood at $7.03/bbl, up $1.59/bbl w-o-w and $2.33/bbl from the average year-to-date.