Highlights (12 October 2018)
- The forecast for demand growth in 2018 and 2019 has been reduced for both years by 110 kb/d to 1.3 mb/d and 1.4 mb/d, respectively. This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data.
- OECD demand, supported by a strong 1Q18 and robust US growth, will expand by 300 kb/d in 2018, slowing to 130 kb/d in 2019. Non-OECD demand will grow by 1 mb/d in 2018, led by China and India, which together account for 60% of the global increase.
- Global oil supply is growing fast; in September, world oil production, at around 100 mb/d, was 2.6 mb/d higher than a year ago. Non-OPEC output is forecast to expand by 2.2 mb/d and 1.8 mb/d in 2018 and 2019, respectively, led by the United States.
- OPEC crude oil production rose by 100 kb/d in September to a one-year high of 32.78 mb/d.Since May, OPEC output has increased by 735 kb/d, led by the main Gulf producers and supported by Nigeria and Libya, offsetting falls in Iran and Venezuela.
- Refiners are facing increased competition as capacity additions surge between now and end-2019. After increasing by 0.9 mb/d this year, refinery runs will grow by 1.3 mb/d in 2019, while refined product demand growth is only 1 mb/d.
- OECD commercial stocks rose 15.7 mb in August to 2 854 mb, their highest level since February, on strong refinery output and LPG restocking. OECD inventories are likely to have risen by 43 mb (470 kb/d) in 3Q18, the largest quarterly increase in stocks since 1Q16.
- ICE Brent prices reached four-year highs above $85/bbl in early October. The Brent-WTI differential has widened to $9/bbl as US price increases were weaker. Product prices failed to match the gains made by crude.
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