The International Energy Association (IEA) released its Oil Market Report (OMR) for December, cutting the outlook for 2015 global oil demand growth by 230 MBOPD to 900 MBOPD on lower expectations for the Former Soviet Union and other oil-exporting countries, reports the IEA.
Global production fell by 340 MBOPD in November to 94,000 MBOPD on lower OPEC supplies. Annual gains of 2,100 MBOPD were split evenly between OPEC and non-OPEC producers. U.S. light, tight oil supply continued to push total non-OPEC output to record levels of 1,900 MBOPD for 2014, but the report indicates that production is expected to slow to 1,300 MBOPD for next year.
OPEC crude supply declined by 315 MBOPD last month to 30,320 MBOPD after Libya’s recovery stumbled, but was still 765 MBOPD higher than in November of last year. The “call on OPEC crude and stock change” for 2015 was revised down by 300 MBOPD to 28,900 MBOPD. The “call” is expected to decline seasonally by 1,200 MBOPD from this quarter to Q1’15.
Global refinery crude throughputs bounced back in November from a seasonal low of 76,800 MBOPD in October. The estimate of throughputs this quarter has been revised sharply higher since the previous OMR, to 78,000 MBOPD, as refiners apparently took advantage of healthy margins ahead of a flurry of refinery start-ups expected early next year.
The report also said that a strong dollar and lifting of subsidies have so far limited supportive price effects on demand, which is now seen reaching 93,300 MBOPD next year, up from 92,400 MBOPD this year.
Oil prices fall further after OMR release
After the IEA announced the latest reduction in global oil demand forecasts on December 12, oil prices dropped again. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January fell $2.14, or 3.6%, to settle at $57.81 a barrel, reports Market Watch. On Friday, oil sold for as little as $57.34 a barrel. The settlement was the lowest since May 15, 2009.
January Brent crude on London’s ICE Futures exchange fell $1.83, or 2.9%, to end at $61.85 a barrel on Friday, marking the lowest settlement since July 14, 2009.
Both WTI and Brent crude have now lost more than 45% of their value since a peak in June this year, and prices remain bearish in the near-term. Bloomberg reported the energy minister of the United Arab Emirates said OPEC is not considering cutting its 30,000 MBOPD production target even if oil prices fall as low as $40. The group is scheduled to reconvene on June 5, 2015, unless an emergency meeting is scheduled. The minister said the group needs to wait for “at least a quarter” before considering any changes to its decision.
At the time of this story’s writing, WTI was trading at $56.34, while Brent was trading at $61.50.
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