IEA

In-depth: IEA Predicts Rise of Cheap Renewables and China’s Move away from Coal

20 Nov 2017   IEA

The global energy system is in a state of flux. Renewables are experiencing rapid deployment and steep pricefalls. A growing portion of global energy is provided by electricity. There’s a slow, but apparently inexorable move away from coal in China. And there’s a surge in natural gas and oil production in the US. These are just some of the insights in the latest annual World Energy Outlook (WEO), which was published by the International Energy Agency (IEA) this week. Specifically, some of the WEO’s key points include: Solar power will be cheaper than coal, on average, in China, India and the US between 2025 and 2030. Renewables will make up two-thirds of total global investment in new power plants and will be the single largest source of additional energy added up to 2040. By 2040, China will add electricity generation equivalent to the entire US power system. India will […]

IEA: ‘Too Early to Write Obituary of Oil’

15 Nov 2017   IEA, Oil Supply

The world’s consumers are not yet ready to say goodbye to the era of oil. The world’s consumers are not yet ready to say goodbye to the era of oil, according to the International Energy Agency’s (IEA) World Energy Outlook (WEO) 2017 report. WEO 2017 projects that global oil demand will continue to grow to 2040, although at a steadily decreasing pace. Up until the mid-2020s demand growth remains robust, according to the IEA’s New Policies Scenario, but slows thereafter as greater efficiency and fuel switching bring down oil use for passenger vehicles. Powerful impetus from other sectors is enough to keep oil demand on a rising trajectory to 105 million barrels per day by 2040 though, according to the report, with oil use to produce petrochemicals the largest source of growth, closely followed by rising consumption for trucks, aviation and shipping. WEO 2017 also projects that the United […]

Oil Prices Nosedive On Bearish IEA Report

15 Nov 2017   IEA, Prices

The IEA lowered its demand forecast by 50,000 bpd in 2017 and 190,000 bpd in 2018, raising concerns that the oil market is actually not as healthy as it seems. That puts demand growth at 1.5 million barrels per day this year, and only 1.3 mb/d in 2018. In fact, the oil market might actually be oversupplied in the fourth quarter of 2017, which could deflate the recent price rally. Oil traders have gained confidence in the rebalancing effort lately, with impressive OPEC compliance and a high likelihood that the cartel extends its production cuts, perhaps through the end of next year. That has helped push Brent into the mid-$60s and WTI in the upper-$50s per barrel. OPEC added even more enthusiasm to the market on Monday, when it published a report that boasted of “high conformity levels” with the production cuts from its members, and noted that the […]

Don’t buy the tight-market hype, IEA says

15 Nov 2017   IEA

Gains in oil production from countries outside of OPEC might be more than what’s expected for demand next year, the Paris-based International Energy Agency reported. File photo by Gary C. Caskey/UPI Nov. 14 (UPI) — Unless OPEC agrees to cut more production, output from non-member states will leave the market in surplus and limit the rally in oil prices, the IEA said. Some ministers for the Organization of Petroleum Exporting Countries said an extension of an agreement that sidelines about 2 percent of the total global demand for oil in an effort to balance the market was necessary next year. Saudi Crown Prince Mohammed bin Salman said in October that the deal was working and demand was moving closer to the level of supply, but extraordinary action was needed for further rebalancing. The effort, which started in January, is credited with pulling the price of oil back from the […]

US crude output set to rocket, says IEA

15 Nov 2017   IEA, Oil Supply, USA

Growth in US oil output until 2025 will be the strongest seen by any country in the history of crude markets, making it the “undisputed” leader among global producers, the International Energy Agency said on Tuesday. Technological advances that have enabled production from US shale oilfields to thrive will lead to growth of 8m barrels a day between 2010 and 2025, surpassing expansion rates enjoyed by any other nation. “The US will become the undisputed global oil and gas leader for decades to come,” said Fatih Birol, IEA executive director. The country is expected to account for 80 per cent of the increase in global supply over the same period. US tight oil production, which includes crude, condensates and natural gas liquids (NGLs) will rise to 13m b/d by 2025, out of total US output of 16.9m b/d. “The growth in production is unprecedented, exceeding all historical records, even Saudi Arabia after production from the mega Ghawar field or Soviet gas production from the super Siberian fields,” Mr Birol said.

IEA’s Shocking Revelation About U.S. Shale

15 Nov 2017   IEA, Shale Oil, USA

The oil market is exhibiting signs of having reached a “new normal,” according to the IEA, with the floor for oil prices jumping from $50 to $60 per barrel. But a few factors could poke holes in that price floor, and market watchers should be careful not to become overly optimistic about the trajectory for oil prices, the agency says. In its latest Oil Market Report , the Paris-based energy agency says that a confluence of events have pushed up Brent prices. Lower-than-expected oil production figures coming out of Mexico, the U.S. and the North Sea have combined with unexpected outages in Iraq (-170,000 bpd in October), Algeria, Nigeria and Venezuela. Those outages, plus the geopolitical turmoil in Iraq, and especially Saudi Arabia, have heightened tension in the oil market. Inventories also continue to decline. OECD commercial stocks fell below the symbolic 3-billion-barrel mark in September for the first […]

International Energy Agency – OMR

14 Nov 2017   IEA
  • Higher prices and relatively mild early winter temperatures contributed to a downward revision to our demand forecast. Growth has been revised down by 0.1 mb/d for both 2017 and 2018 and we now see increases of 1.5 mb/d in 2017 (or 1.6%), to 97.7 mb/d, and 1.3 mb/d in 2018 (or 1.3%) to 98.9 mb/d.
  • Global oil supply rose 100 kb/d in October to 97.5 mb/d on higher flows from non-OPEC countries. Production was 470 kb/d below a year ago, with OPEC supply sharply down from high 4Q16 levels. Non-OPEC supply is expected to rise by 0.7 mb/d in 2017 and 1.4 mb/d next year, led by higher US output.
  • OPEC crude output fell 80 kb/d in October due mainly to lower supply from Algeria, Iraq, and Nigeria. Output of 32.53 mb/d, the lowest since May, was down 830 kb/d from the record rates seen a year ago. The compliance rate with supply cuts in October was 96% and for the year-to-date it was 87%.
  • Hurricane Harvey contributed to OECD industry stocks falling by 40 mb in September to below 3 000 mb for the first time in two years. Global stocks dropped by 63 mb in 3Q17, only the second quarterly draw since 2014. In October, stocks drew in the US and likely in China, but rose elsewhere.
  • Benchmark crude prices increased by $1-2/bbl in October versus September and pushed higher in early November, buoyed by tensions in the Middle East. Oil product markets weakened relative to crude following the return of US refineries to higher throughput levels.
  • For 4Q17, our refining throughput forecast is revised marginally lower to 80.8 mb/d, but refined product inventories are forecast to build as demand seasonally slows down. Relatively robust refining activity level continues into January and February 2018, with runs forecast to grow 1.1 mb/d y-o-y.
  • Our analysis of global oil balances implies oversupplied crude oil markets in 4Q17 and 1Q18. While refined product inventories are also forecast to increase, the main oil stock draws are expected from increased seasonal demand for LPG.

Southeast Asia’s growing energy deficit to boost trade flows by 2040: IEA

25 Oct 2017   East Asia, IEA

Southeast Asia’s growing deficit of fossil fuels including oil, natural gas and coal up to 2040 will dictate energy trends for the whole region, including trade flows, investments and policy making, according to the International Energy Agency’s latest outlook. The deficit of primary energy sources will be triggered by a combination of declining production and reserves in the region, ballooning demand due to rising population and regulations that curb exploitation of natural resources. While each country faces different challenges, in total the region will be short of oil, gas and coal by 2040, the IEA said in its 2017 Southeast Asia Energy Outlook. “Flattening gas production and rising demand in recent years calls into question the position of Southeast Asia as a net gas exporter,” the IEA’s director of energy markets and security Keisuke Sadamori said. He said rising oil demand and declining production have already increased the region’s […]

IEA sees Southeast Asia oil demand growing until at least 2040

24 Oct 2017   Energy Demand, IEA

Southeast Asian demand for oil will keep growing until at least 2040 as emerging nations there rely on the fossil fuel to transport their rapidly growing populations, ship goods and make plastics, the International Energy Agency said on Tuesday. Oil usage in the region will expand to around 6.6 million barrels per day by 2040 from 4.7 million bpd now, with the number of road vehicles increasing by two-thirds to around 62 million, the agency said in a report. It did not make any forecasts beyond 2040. A global push to replace combustion engines in vehicles with electric-powered ones to fight climate change has raised concerns in the oil industry that demand for the commodity could peak in the next 10-20 years. But oil will […]

IEA: Subdued demand means relatively oversupplied oil market

22 Sep 2017   IEA, Oil Supply

Despite multilateral efforts to balance the oil market with managed production cuts, the situation in general still favors the supply side, the IEA said. The Organization of Petroleum Exporting Countries in January started implementing an arrangement to sideline the equivalent of about 2 percent of the world’s demand for oil in an effort to draw on the five-year level of crude oil held in global stockpiles. Parties to a committee monitoring the impacts of the agreement meet later this month, after already extending the original terms by another three months earlier this year. Commentary from the International Energy Agency, published late Wednesday , said long-term trends matter when looking for signs of balance. […]

IEA Sees Risk of Volatile Oil Prices on Weak Upstream Investment

19 Sep 2017   IEA

Lag in investment raises risk of tightened market: Atkinson IEA failed to foresee ‘technical ingenuity’ of U.S. shale A dearth of new investment in oil production is stoking a risk of tighter crude supply and unstable prices, even as demand growth is expected to slow over the next five years, according to a senior International Energy Agency official. The worldwide cushion of spare production capacity will shrink without further investment in exploration and output, Neil Atkinson, the head of the IEA’s oil markets and industry division, said at a conference in Manama, Bahrain. “There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices,” he said Sunday. “There is at least a possibility of going back to the situation we had 10 years ago where […]

IEA: Price Spike Coming In 2020

19 Sep 2017   IEA

The oil market has been awash in crude for more than three years, and OPEC has struggled to accelerate the rebalancing effort, but the world could be heading for a supply crunch in a few years due to the sharp fall in industry spending. The halving of oil prices from $100 per barrel before 2014 down to just $50 today has led to a corresponding plunge in upstream investment. But even as benchmark prices seem to have stabilized over the past year, with most analysts predicting gradual and modest gains in the year ahead (depending on OPEC’s actions), there’s still no sign of a serious rebound in spending levels. The problem of a shortage of supply seems very far off today, given the swift turnaround in U.S. shale and persistently high levels of crude storage. But demand continues to rise—the IEA just upgraded its demand growth estimate for 2017 […]

IEA Sees Risk of Volatile Oil Prices on Weak Upstream Investment

18 Sep 2017   IEA

Lag in investment raises risk of tightened market: Atkinson IEA failed to foresee ‘technical ingenuity’ of U.S. shale A dearth of new investment in oil production is stoking a risk of tighter crude supply and unstable prices, even as demand growth is expected to slow over the next five years, according to a senior International Energy Agency official. The worldwide cushion of spare production capacity will shrink without further investment in exploration and output, Neil Atkinson, the head of the IEA’s oil markets and industry division, said at a conference in Manama, Bahrain. “There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices,” he said Sunday. “There is at least a possibility of going back to the situation we had 10 years ago where […]

IEA Sees Strongest Global Oil-Demand Growth in Two Years

15 Sep 2017   IEA

Global oil demand will climb this year by the most since 2015, the International Energy Agency said, amid stronger-than-expected consumption in Europe and the U.S. The IEA, which advises most major economies on energy policy, increased its estimate for demand growth in 2017 by 100,000 barrels a day to 1.6 million a day, or 1.7 percent. The re-balancing of oversupplied world markets is continuing, it said, with OPEC supplies falling for the first time in five months and inventories of refined fuels in developed nations subsiding toward average levels. “Demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” the Paris-based agency said in its monthly report. The impact of Hurricane Harvey, which struck Texas last month, on global oil markets is “likely to be relatively short-lived,” the IEA said. Local stockpiles were at “comfortable” levels before the storm hit, while releases from government reserves […]

The Most Bullish Oil Report This Year

14 Sep 2017   IEA

Despite the huge uncertainties related to the two massive hurricanes that hit the U.S., the global oil market looks tighter than it has in a long time, according to a new report from the International Energy Agency. Global oil supply fell in August for the first time in four months, the IEA said, a result of a dip in OPEC’s oil production, combined with refinery maintenance and sizable outages from Hurricane Harvey. World oil supply fell by 720,000 barrels per day (bpd) in August compared to July, a significant decline that will aid in the market’s progress towards rebalancing. Multiple outages contributed to the decline in global output. Hurricane Harvey resulted in U.S. oil production falling by 200,000 bpd in August—outages that occurred mostly in the Eagle Ford shale and offshore in the Gulf of Mexico. But OPEC also saw its collective output fall by 210,000 bpd in August, […]

IEA Sees Strongest Global Oil-Demand Growth in Two Years

14 Sep 2017   IEA

Global oil demand will climb this year by the most since 2015, the IEA says, amid stronger-than-expected consumption in Europe and the US. (Bloomberg) — Global oil demand will climb this year by the most since 2015, the International Energy Agency said, amid stronger-than-expected consumption in Europe and the U.S. The IEA, which advises most major economies on energy policy, increased its estimate for demand growth in 2017 by 100,000 barrels a day to 1.6 million a day, or 1.7 percent. The re-balancing of oversupplied world markets is continuing, it said, with OPEC supplies falling for the first time in five months and inventories of refined fuels in developed nations subsiding toward average levels. “Demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” the Paris-based agency said in its monthly report. The impact of Hurricane Harvey, which struck Texas last month, on global oil […]

Global oil inventories shrinking on robust demand: IEA

13 Sep 2017   IEA

The global oil surplus is beginning to shrink due to stronger-than-expected European and U.S. demand growth, as well as production declines in OPEC and non-OPEC countries, the International Energy Agency said on Wednesday. The agency, which coordinates energy policies of industrial nations, raised its 2017 global oil demand growth estimate to 1.6 million barrels per day (bpd) from 1.5 million bpd. “OECD demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” the Paris-based IEA said. “Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly,” the IEA said. Robust demand in industrialised countries was a key factor behind global demand growing 2.3 million bpd in the second quarter, the highest quarterly […]

IEA says no need to release emergency oil supplies due to Harvey

29 Aug 2017   IEA

The International Energy Agency said on Monday that there was no need for now to release fuel from emergency stockpiles to compensate for disruption caused by Hurricane Harvey because global oil markets were well supplied. Several refineries in the U.S. state of Texas have shut because of the storm, halting fuel production and causing gasoline prices to rise. The shutdowns affect international as well as domestic fuel supplies because the United States ships exports from the region. The IEA said it was closely monitoring the storm and would be ready to respond to major oil supply disruptions through its emergency response system. The Paris-based intergovernmental agency coordinates emergency fuel releases when natural disasters or war interrupt global energy supplies.

IEA says strong oil demand growth helps market’s rebalancing

11 Aug 2017   IEA, Prices

Global oil demand will grow more quickly than expected this year, helping to ease a glut despite rising crude production from North America and weak OPEC compliance with output cuts, the International Energy Agency said on Friday. The agency revised its 2017 demand growth forecast to 1.5 million barrels per day (bpd) versus 1.4 million bpd in its previous monthly report and said it expected demand to expand by a further 1.4 million bpd next year. “Producers should find encouragement from demand, which is growing year-on-year more strongly than first thought,” the Paris-based IEA said. “There would be more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve,” the IEA added. The Organization of the Petroleum Exporting Countries is curbing output by about 1.2 […]

IEA Less Confident on Oil Rebalancing as OPEC Supply Rises

14 Jul 2017   IEA, Oil Supply

The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the IEA says. (Bloomberg) — The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the International Energy Agency said. While world demand is climbing faster than initially estimated, OPEC’s implementation of the supply cutbacks needed to clear the inventory surplus has faltered to its lowest level since the group began in January, the Paris-based agency said. That’s a change from two months ago when the IEA said the “ rebalancing is here” and was accelerating in the short term. “We need to wait a little longer to confirm if the process of rebalancing has actually started in the second quarter,” said the IEA, which advises most of the world’s major […]

International Energy Agency OMR

14 Jul 2017   IEA, Oil Supply
  • Global oil supply rose by 720 kb/d in June to 97.46 mb/d as producers opened the taps. Output stood 1.2 mb/d above a year ago with non-OPEC firmly back in growth mode. Non-OPEC production is expected to expand by 0.7 mb/d in 2017 and 1.4 mb/d in 2018.
  • OPEC crude output rose by 340 kb/d in June to 32.6 mb/d after Saudi flows increased and Libya and Nigeria, spared from cuts, pumped at stronger rates. OPEC compliance slumped to 78%, the lowest rate this year, and was overtaken by the non-OPEC group whose rate improved to 82%.
  • For global demand, after lacklustre 1.0 mb/d growth in 1Q17, there was a dramatic acceleration in 2Q17 to 1.5 mb/d. For 2017 as a whole, demand is forecast to reach 98.0 mb/d, with growth revised up by 0.1 mb/d compared to last month’s Report to 1.4 mb/d. Further growth of 1.4 mb/d is foreseen for 2018, with global demand reaching 99.4 mb/d.
  • OECD industry stocks fell in May by 6 mb on lower imports of crude and products. Stocks are now 266 mb above the five-year average, down from 300 mb in April. Preliminary data show a moderate reduction in OECD stocks for June.
  • Benchmark crude oil prices fell by $3-4/bbl on average in June and remain close to their level when the OPEC output deal was announced. Sour crudes such as Dubai, Maya and Urals were all boosted by tight supplies.
  • Global refinery throughput is forecast to reach a record high of 81 mb/d in 3Q17, up 0.8 mb/d from 2Q17 levels.  The US contributes half of the 3Q17 build. Refinery runs will decline seasonally by 1.5 mb/d from the peak August level to October.

IEA: Market Shows Waning Confidence In Oil Rebalancing

14 Jul 2017   IEA, Prices

The rebalancing of the oil market is taking too long, the International Energy Agency (IEA) said in its Oil Market Report on Thursday. Since the record net long position that money managers built in February on hopes that OPEC’s cuts would rebalance the market, investors’—and industry bodies’—confidence has been waning. “Brent prices have closed below $50/bbl each day since early June and few investors expect a recovery anytime soon,” the IEA said. Since the start of the production cuts, some issues have been popping up each month to raise doubts about the rate at which the market is rebalancing, the agency noted, adding: “This month, there are two hitches: a dramatic recovery in oil production from Libya and Nigeria and a lower rate of compliance by OPEC with its own output agreement.” Libya and Nigeria contributed the most to the 393,000-bpd increase in the cartel’s total crude output in […]

Most oil players losing confidence in the market, IEA says

14 Jul 2017   IEA

The dip in oil prices may be in part because of a loss in investor confidence and it’s starting to hit U.S. shale oil profits, the International Energy Agency said. File photo by Gary C. Caskey/UPI July 13 (UPI) — Oil market investors are losing confidence over OPEC’s effort to offset the glut of supplies, though the impact could be hitting U.S. producers, the IEA said. The Organization of Petroleum Exporting Countries and a handful of non-member producers in January started implementing a deal to curb output to offset the supply-side strains that pushed oil prices below $30 per barrel in early 2016. Member states Libya and Nigeria are not participating in the deal so they can steer oil revenue toward national security efforts. Iran is the only member state that has room for production growth so it can regain a market share lost to sanctions. Of the three, […]

Shale Investment Booms, But Global Oil Has A Big Problem

12 Jul 2017   IEA, Oil Supply, Shale Oil

The IEA’s World Energy Investment 2017 report predicts a slight increase in oil and gas investment this year, rising by 3 percent. That comes after a plunge of 44 percent between 2014 and 2016, a steep drop off due to the crash in oil prices. In 2016 alone, spending on oil and gas fell by 26 percent from a year earlier, dropping to $650 billion. This year’s expected increase will halt the slide in spending. However, things are not all well. The only reason the industry might avoid another year of spending contraction is almost entirely due to U.S. shale, which will see investment increase by 53 percent. Investment in the Middle East and Russia is “resilient,” but the global oil industry on the whole is retreating from complex megaprojects that, while expensive, represent consistent sources of supply over the long run. Instead, oil companies are focusing on short-cycle […]

Energy jobs on the decline, but not production, IEA finds

12 Jul 2017   IEA, Oil Supply

Technological advances have led to declines in labor tied to oil and gas with only small impacts on production, the International Energy Agency said. A report from the IEA on overall capital spending in an era where crude oil prices have lingered at historic lows found technological gains are having a clear impact on employment. “In general, technological progress is leading to lower labor intensity across the energy system,” the IEA reported. “For example, a 30 percent drop in jobs in U.S. oil and gas upstream from its peak level in 2014 to its trough in 2016 was accompanied by only a marginal decrease in production.” U.S. oil production has remained robust even as crude oil prices […]

IEA Says Spending in U.S. Shale Drives Global Oil Investment Recovery

11 Jul 2017   IEA, Shale Oil

Global investments in oil and gas fields are likely to rebound modestly this year thanks to a sharp uptick in spending by U.S. shale producers, the International Energy Agency said in a report Tuesday. The 3% increase in fossil-fuel development foreseen by the IEA in 2017 represents a positive note for an industry that went through the longest period of retrenchment on spending in half a century after the oil-price crash…

IEA: improving efficiency of road-freight transport critical to reduce oil-demand growth; three areas of focus

Improving the efficiency of road-freight transport is critical to reducing the growth in oil demand, carbon emissions and air pollution over the next decades, according to the International Energy Agency’s latest report, The Future of Trucks: Implications for energy and the environment . Although trucks are a major contributor to the growth in transport-fuel consumption and emissions, the sector receives far less attention and policy focus than passenger vehicles, the IEA noted. Only four countries have energy-efficiency standards for heavy trucks, compared with some 40 countries with passenger-vehicle standards. Yet the growth in oil demand from trucks has outpaced all other sectors—including passenger cars, aviation, industry and petrochemical feedstocks—since 2000 and contributed 40% to global oil demand growth, a similar contribution as cars. Today, trucks account for almost a fifth of global oil demand, or around 17 million barrels per day—equivalent to the combined oil production of the United […]

Oil supply seen outpacing consumption in 2018, demand to top 100 million barrels per day

15 Jun 2017   IEA

Growth in oil supply next year is expected to outpace an anticipated pick-up in demand that will push global consumption above 100 million barrels per day (bpd) for the first time, the International Energy Agency said on Wednesday. The Paris-based IEA said production outside the Organization of the Petroleum Exporting Countries would grow twice as quickly in 2018 as it will do this year, when OPEC and 11 partner nations have restrained output. “For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,” the IEA said. “In 2018, we expect non-OPEC production to grow by 1.5 million bpd which is slightly more than the expected increase in global demand.” Brent […]

Market balance delayed, International Energy Agency says

15 Jun 2017   IEA

Market balance might be facing headwinds given strong production trends and high levels of oil in storage, the International Energy Agency said. File photo tlegend/Shutterstock. June 14 (UPI) — Pressure from U.S. oil production and some OPEC members mean market balancing is stalled, the International Energy Agency reported Thursday. Parties to an agreement led by the Organization of Petroleum Exporting Countries to balance the market through managed production declines decided to extend the arrangement by three months into early 2018. That led to a downturn in crude oil prices as many market watchers were anticipating deeper cuts. In its monthly market report for June, OPEC economists said Wednesday that the market was balancing in response to the production arrangement, but at a slower pace than expected. The International Energy Agency mirrored OPEC’s sentiments in its own monthly report , saying stronger U.S. crude oil production, which could increase faster […]

Global Oil Consumption Rate Grows

15 Jun 2017   IEA

Global oil consumption grew above the 10-year average rate for a second consecutive year in 2016. Global oil consumption grew above the 10-year average rate for a second consecutive year in 2016, rising by 1.6 percent, or 1.6 million barrels per day, BP’s latest Statistical Review of World Energy revealed. Strong increases in demand were seen from India (up 300,000 bpd) and Europe (up 300,000 bpd) and while demand from China continued to grow (up 400,000 bpd) it was lower than in recent years. Growth in production was limited to only 0.5 percent, which led to the oil market broadly returning back into balance by mid-year. However, prices continued to be depressed by the large overhang of built-up inventories. Natural gas production was also adversely affected by low prices, growing by only 0.3 percent. US gas output fell in 2016, the first reduction since the advent of the shale […]

Oil Prices Fall As IEA Points At Poor Fundamentals

15 Jun 2017   IEA

Oil slumped again on Wednesday on a downbeat assessment from the IEA regarding the health of the oil market. After posting some relatively optimistic projections for the “rebalancing” process in recent months, the IEA has had to concede that the massive inventory overhang might last longer than it originally predicted. The report came in the same week that OPEC published its monthly Oil Market Report, in which it too admitted that the oil market was adjusting at a “slower pace” than expected. The IEA pointed to several different metrics that don’t bode well for higher prices. First, total OECD inventory levels “increased by more than the seasonal norm” in April. Crucially, inventories in the OECD have actually grown year-to-date, despite five months’ worth of OPEC cuts. As a result of rising U.S. shale production, weak gasoline demand, high levels of U.S. imports, and a drop off in exports, U.S. […]

Excess oil inventories to last until 2018 – IEA

14 Jun 2017   IEA, Oil Supply

Oil demand should outpace supply in the second half of this year but excess inventories will persist well into 2018, dealing a blow to global crude producers enacting output cuts to bring down stubbornly high stockpiles. The forecast from the International Energy Agency comes as higher than expected demand growth next year is met by even stronger output from the US and other producers outside of the Opec cartel. In its monthly oil market report, which include forecasts for next year, the Paris-based energy agency said: “[The] outlook for 2018 makes sobering reading for those producers looking to restrain supply.”

World’s energy system not on track to meet climate goals: IEA

6 Jun 2017   IEA, Renewables

Barely one tenth of renewable energy technology is ready to meet long-term climate change targets as governments have failed to adequately support large-scale deployment, a report by the International Energy Agency showed on Tuesday. Under a global climate pact, called the Paris Agreement, nearly 200 countries agreed last year to phase out greenhouse gas emissions this century and to limit a global average rise in temperature to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit). Energy technology innovation can help achieve a cleaner energy system but strong policy signals are needed, the report said. Only three out of 26 assessed technologies – electric vehicles, energy storage and mature variable renewables (solar PV and onshore wind) – are on track to meet climate targets, according to the IEA. “Transformation toward a clean energy system is not in line with stated international policy goals. Many technology areas suffer from a lack […]

IEA says global oil market now close to balance

14 Apr 2017   IEA, Oil Supply

The global oil market is close to balance, after nearly three years of excess supply, as production cuts by top exporters offset a longer-term decline in demand in the richest nations, the International Energy Agency said on Thursday. The agency said oil stocks across the Organisation for Economic Cooperation and Development (OECD) fell by 17.2 million barrels in March, resulting in an increase of 38.5 million barrels, or 425,000 barrels per day (bpd), in the first three months of the year. “The net result is that global stocks might have marginally increased in the first quarter, versus an implied draw of about 0.2 million barrels per day,” the Paris-based IEA said. “It can be argued confidently that the market is already very close to balance, and as more data becomes […]

International Energy Agency OMR

13 Apr 2017   IEA
  • Global demand growth of 1.3 mb/d is forecast for 2017, a second consecutive annual decline and slightly below our prior forecast following weaker than expected 1Q17 demand. Subdued gains in Russia and India, and weaker momentum in OECD countries, were key factors.
  • World oil supply fell by 755 kb/d in March as OPEC and non-OPEC producers pumped less and improved compliance with the output reduction pact. Total non-OPEC output is set to rise again, however, with growth of 485 kb/d expected in 2017, recovering from a decline of 790 kb/d last year.
  • OPEC crude output fell by 365 kb/d in March to 31.68 mb/d, led by losses in Nigeria, Libya – both exempt from supply cuts – and Saudi Arabia. OPEC’s 1Q17 output of 31.9 mb/d was 240 kb/d below the 1Q17 “call” on its crude. The call rises to 32.9 mb/d in 2Q17, which implies global stocks will draw further if OPEC maintains solid adherence to its supply cut.
  • OECD industry stocks drew moderately in February and are forecast to fall further in March. However, due to January’s large build, we estimate OECD stocks gained 38.5 mb (425 kb/d) in 1Q17. Marginal stocks held offshore or in smaller facilities drew by an estimated 325 kb/d during the same period.
  • Crude prices fell more than $3/bbl on average in March, but rose by $5/bbl in early April. Money managers cut their net long positions in crude futures by 200 mb in March amid the price fall. Product prices showed few signs of rallying during the refinery maintenance season.
  • After 1Q17’s almost flat performance vs 1Q16, refinery throughput in 2Q17 will grow 1.15 mb/d y-o-y. Refinery crude demand will surge by 3.5 mb/d between March and July, with most of the increase coming from Atlantic Basin refiners and the Middle East.

Half Time

It is now half time for the six-month oil production cuts agreed by OPEC and eleven non-OPEC countries. So far, the game has gone fairly well for producers. Prices have stabilised again recently after falling by about ten percent in early March, with recent unplanned outages and rising political tension in the Middle East playing a role. For OPEC countries, compliance has been impressive from the start while non-OPEC participants are gradually increasing their compliance rate, although in their case it is harder for analysts to verify the data.

Even at this mid-way point, we can consider what comes next. It is of course OPEC’s business to decide on its output levels, but a consequence of (hypothetically) extending their output cuts beyond the six-month mark would be bigger implied stock draws. This would provide further support to prices, which in turn would offer further encouragement to the US shale oil sector and other producers.

Indeed, although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the US, will soon be on the rise again. Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May. For the full year, we see growth of 485 kb/d, compared to a decline of 790 kb/d in 2016. The main impetus comes from the US where monthly data shows that output reached 9.0 mb/d in March, up from a trough of 8.6 mb/d in September 2016. We now expect that US production will be 680 kb/d higher at the end of the year than it was at the end of 2016, an upgrade to our previous forecast.

Another factor that could influence the market balance is revised demand growth. We have cut our growth number for 1Q17 by 0.2 mb/d to 1.1 mb/d. New data shows weaker-than-expected growth in a number of countries including Russia, India, several Middle Eastern countries, Korea and the US, where demand has stalled in recent months. After upgrading demand estimates for 2Q17 and cutting it for the second half of the year, we are left with growth for 2017 at 1.3 mb/d rather than the 1.4 mb/d previously forecast.

Looking at observed stocks versus the implied gap between demand and supply; new OECD stocks data for February shows that, set against the conventional measure of the five-year average, they remain about 330 mb above this level. OECD stocks, particularly products, drew by 0.8 mb/d in 4Q16, but we estimate that in 1Q17 they increased by 0.4 mb/d, mainly for crude oil and, in turn mainly in Europe and the US. Outside of the OECD, in the Stocks section of this Report we show that a group of stock centers, including Saldanha Bay, the Caribbean and floating storage have, provisionally, seen stocks fall by 0.3 mb/d in 1Q17. The net result is that global stocks might have marginally increased in 1Q17 versus an implied draw of about 0.2 mb/d. It can be argued confidently that the market is already very close to balance, and as more data becomes available this will become clearer. We have an interesting second half to come.

IEA Says Oil Prices Will Not Jump Sharply, Despite OPEC Supply Cuts

31 Mar 2017   IEA, Prices

The International Energy Agency (IEA) does not expect a major increase in global oil prices despite efforts by OPEC and non-OPEC members to reduce output, its executive director Fatih Birol told Reuters. OPEC and 11 other producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year in an effort to eradicate a stubborn supply glut and boost prices. That agreement, which provided an initial boost to crude prices, could be extended for six months, but Birol does not believe that prices would receive a significant boost. “There is a tremendous amount of stock in the markets and to […]

Oil Gains on U.S. Supply as IEA Says Time Needed to Drain Glut

16 Mar 2017   IEA

Oil rebounded above $48 a barrel amid a reported decline in U.S. crude stockpiles as the International Energy Agency said the market needs time to drain a global inventory glut. Futures advanced as much as 2.4 percent in New York after slumping almost 11 percent the previous seven sessions. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles rose for a 10th week. Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to the International Energy Agency. Oil last week broke below $50 a barrel for the first time since December as rising U.S. supply has swamped the impact of supply reductions from members of the Organization of Petroleum Exporting Countries and 11 other nations that started Jan. 1. While an OPEC […]

Be patient on oil market balance, IEA says

16 Mar 2017   IEA

There’s nothing shocking in the steady build of crude oil inventory levels and those waiting for the market to balance out should be patient, the IEA said. The Organization of Petroleum Exporting Countries started implementing a production deal in January that aimed to correct a market characterized by oversupply. Despite the cap on production, crude oil stockpiles in the world’s leading economies continue to build up, suggesting some pressures from the glut remain. A report from the International Energy Agency stated the buildup in the level of unabsorbed crude oil should not be surprising considering OPEC members were increasing their production “relentlessly” before the deal was reached in November. “Export volumes are still appearing in storage around the world and, as part of this, U.S. stocks are building,” the IEA’s report read. For the United States, the world’s leading economy, it’s seen a “triple surge” […]

International Energy Agency Oil Market Report

16 Mar 2017   IEA
  • Having expanded by 1.6 mb/d in 2016, global oil product demand growth is expected to ease back to 1.4 mb/d in 2017. Early indicators of 1Q17 demand support this, with slowdowns seen in January in Japan, Germany, Korea and India.
  • Global oil supplies rose 260 kb/d in February as OPEC and non-OPEC producers pumped more.At 96.52 mb/d, world oil production stood 170 kb/d below a year ago. OPEC posted a year-on-year decline for the second month running. In 2017 non-OPEC output is set to rise 0.4 mb/d to 58.1 mb/d.
  • OPEC crude output rose by 170 kb/d in February to 32 mb/d, putting compliance with the group’s supply cut at 91% for the month. Saudi Arabia raised output by 180 kb/d month-on-month, but flows remained below its agreed target.
  • OECD commercial inventories rose in January for the first time in six months by 48 mb, or 1.5 mb/d, to 3 030 mb, underpinned by near-record US crude stocks and gains in Europe. Preliminary data show a modest draw of 5 mb in February despite further builds in US crude.
  • Benchmark crude prices moved in a tight range of $55-56/bbl through February, before falling more than $3/bbl on 8-9 March. Sour crude Dubai maintained the gains achieved against Brent in recent months, while middle distillates and gasoline prices rose in most regions.
  • Refinery throughput growth recovered to 0.9 mb/d y-o-y in 4Q16, but will slow down to a 0.6 mb/d increase in 1Q17, before surging by 1.9 mb/d in 2Q17. This reflects a recovery from 2Q16’s unusually low levels, with implied refined product stock drawdowns supporting higher throughput.

IEA Claims The OPEC Deal Is Working

16 Mar 2017   IEA

OPEC’s relentless output increase before their November deal to curtail supply has led to the first global stocks increase in six months, the International Energy Agency (IEA) said on Wednesday, noting that the market needs time to see a significant drawdown, expecting an implied deficit of 500,000 bpd for the first half at current production levels and supply and demand fundamentals. According to IEA data, total OECD oil stock levels confirm the legacy of higher production at the end of last year. Global inventories had started falling in August from record high levels, and by end-December they had dropped by 120 million barrels, an average decline of almost 800,000 bpd, IEA said. “However, in January we saw an abrupt about turn with OECD stocks increasing by 48 mb (1.5 mb/d) and preliminary data for February suggests they have fallen back again only modestly,” the agency noted. Export volumes are […]

Global oil stocks rise, but IEA says OPEC curbs may create H1 deficit

15 Mar 2017   IEA, Oil Supply, OPEC

Global oil inventories rose for the first time in six months in January, despite OPEC’s production cuts, but if the group maintains its output limits, the market may tilt into deficit in the first half of 2017, the International Energy Agency said on Wednesday. The IEA said crude stocks in the world’s richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels. “The actual build in OECD stocks in January reminds us that it may be some time before global stocks start to fall,” the agency said. Compliance by the Organization of the Petroleum Exporting Countries with its agreed output cut of 1.2 million barrels per day in the first half of this year […]

Oil Majors To Boost Production As IEA Warns Of Supply Deficit

Oil prices traded sideways in a quiet market as traders digest the news coming from Houston where the world’s opinion leaders in oil & gas have gathered for this year’s CERA Week. (Click to enlarge) (Click to enlarge) Chart of the Week (Click to enlarge) • Total installed wind capacity surpassed hydropower in the U.S. for the first time last year. • Hydro has been a pillar of the U.S. electricity system for decades – not as large a share of the sector as coal, natural gas or nuclear, but hydro has held a sizable share since the post-WWII build out in the 1940s and 1950s. • On February 12, in the Southwest Power Pool, which covers North Dakota down to Northern Texas, wind accounted for half of the entire system’s generation, the first time that has occurred in one of the seven regional transmission organizations (RTOs). Market Movers […]

IEA warns of potential shortage of global oil supplies in 3 years

8 Mar 2017   IEA, Oil Supply

The recent drop in oil industry investment brought on by weak prices threatens to significantly slow supply growth in the long term, and could lead to a shortage when it comes to meeting global demand, the International Energy Agency said in its five-year oil market forecast released Monday. That may happen even as crude stockpiles in the U.S. and elsewhere climb over the next few years, the IEA said in its “Oil 2017” report. “If the record two-year investment slump of 2015 and 2016 is not reversed,” supply growth may stall by 2020, it said, pointing out that global oil and gas upstream, or exploration and production, investment fell by 25% in 2015 and by another 26% in 2016. This year, it’s “evident” that under the Organization of the Petroleum Exporting Countries-led production cut agreement, output reductions are taking place just as production from the non-OPEC sector, led by […]

IEA: Huge Oil Price Spike Inevitable

8 Mar 2017   IEA, Oil Supply, Prices

Three years of drastic cuts to upstream spending because of the meltdown in oil prices could result in a shortage of oil supply in a few years, according to a new report from the International Energy Agency. When oil prices collapsed in 2014, oil producers quickly took an ax to their spending. Global oil and gas investment dropped by a quarter in 2015 and by an additional 26 percent last year, the IEA estimates. A long list of projects, particularly very large ones, were put on ice. Because many of these projects take years to develop, the sharp slowdown between 2014 and 2016 could result in very few sources of new supply hitting the market towards the end of the decade. To be sure, supply is already coming back. The U.S. has added more than 500,000 bpd since last summer, and shale drillers are ramping up activity. The IEA […]

IEA Sees Oil Investment Revival After a Two-Year Rout

7 Mar 2017   IEA, Oil Supply

Oil companies are reviving investment after a two-year rout as OPEC output cuts boost prices, easing but not eliminating the risk of a future supply crunch, the International Energy Agency said. There are “signs of a modest recovery” in spending in 2017 following two years of big investment cuts, the Paris-based agency said Monday in a report. The IEA doubled forecasts for production growth outside OPEC next year as U.S. shale producers emerge “leaner and fitter” from the downturn. The Organization of Petroleum Exporting Countries and Russia headed an agreement among 24 oil producers last year to clear a global glut, spurring a 20 percent rally in crude prices. Before that decision, OPEC had refused to reduce output on the grounds that any curbs would bail out rival producers. “Until the agreement was struck, prices threatened to return to the levels seen in early 2016” of less than $30 […]

IEA: Oil investment drought threatens price surge

7 Mar 2017   IEA

Drastic cuts in oil industry investment risk creating a shortfall in supply that by 2020 will expose the market to a surge in prices, the International Energy Agency has warned. Despite a chorus of analysts predicting a decline in oil consumption in the coming years, as governments push for energy efficiencies, cleaner fuel usage and electric cars, the IEA cautioned in its five-year outlook: “We see no such peak in sight.” More investment in global oil and gas exploration and production is crucial to ensure future supplies are able to meet growing demand, it added. The oil price crash that sent prices from $115 in 2014 to below $30 early last year forced international energy companies to curb investment by a quarter in 2015, and by a similar amount last year. The Paris-based agency said only modest signs of recovery in 2017 meant that it was far from clear that enough projects would enter the pipeline in the next few years to avoid a supply crunch.

IEA warns of oil ‘supply crunch’ by 2020 with no capex renaissance

7 Mar 2017   IEA

Global oil supply may struggle to match demand after 2020, when the pinch of a two-year decline in investment in new production could leave spare capacity at a 14-year low and send prices sharply higher, the International Energy Agency said on Monday. Investors generally are not betting on a sharp rise in the price of crude oil any time soon, but the contraction in global spending in 2015 and 2016 and growing global demand means the world could well face a “supply crunch” if new projects are not soon given the go-ahead, the IEA said in its five-year “Oil 2017” market analysis and forecast report. Most supply growth is expected to come from the United States, where the IEA said shale, or light tight output (LTO), will grow by 1.4 million barrels per day by […]

IEA: Oil investment drought threatens price surge

7 Mar 2017   IEA

Drastic cuts in oil industry investment risk creating a shortfall in supply that by 2020 will expose the market to a surge in prices, the International Energy Agency has warned. Despite a chorus of analysts predicting a decline in oil consumption in the coming years, as governments push for energy efficiencies, cleaner fuel usage and electric cars, the IEA cautioned in its five-year outlook: “We see no such peak in sight.” More investment in global oil and gas exploration and production is crucial to ensure future supplies are able to meet growing demand, it added. The oil price crash that sent prices from $115 in 2014 to below $30 early last year forced international energy companies to curb investment by a quarter in 2015, and by a similar amount last year. The Paris-based agency said only modest signs of recovery in 2017 meant that it was far from clear that enough projects would enter the pipeline in the next few years to avoid a supply crunch. “We see significant risk of prices rising sharply by 2022, unless a significant amount of new projects are sanctioned and sanctioned quickly,” Fatih Birol, executive director of the IEA said at the CERAWeek energy conference in Houston.

IEA Tracks 40 Percent Compliance Rate For Non-OPEC Deal Participants

11 Feb 2017   IEA

Two anonymous OPEC sources say that eleven of the non-OPEC nations that are part of the oil output reduction deal struck at the end of November have only made 40 percent of promised cuts, according to Reuters . The report said the sources cited numbers found in data published by the International Energy Agency. The IEA’s numbers Friday morning showed that OPEC’s supply-cut deal achieved a greater level of success—a record internal initial compliance rate of 90 percent . The Organization of Petroleum Exporting Countries (OPEC) said its members had made 92 percent of expected cuts, data released the same day showed. OPEC, Russia and other oil producers aimed to curb output by 1.8 million barrels per day during the first six months of the new year in an effort to rid global markets of a price-crashing supply glut. Part of the issue with the low compliance from outside […]

IEA says record OPEC cut compliance helps oil market rebalance

10 Feb 2017   IEA

A worker checks the valves at Al-Sheiba oil refinery in the southern Iraq city of Basra, January 26, 2016. REUTERS/Essam Al-Sudani/File Photo Global oil output plunged in January as OPEC and non-OPEC producers curbed supply to accelerate a market rebalancing following one of the largest oil gluts in a generation, the International Energy Agency said on Friday. Oil supplies fell by around 1.5 million barrels per day last month, including by 1 million bpd for OPEC, leading to record initial compliance of 90 percent with a six-month output-cut deal reached in December by big producers to boost prices. “Some producers, notably Saudi Arabia, (are) appearing to cut by more than required. This first cut is certainly one of the deepest in the history of OPEC output cut initiatives,” the IEA, which advises industrial nations on energy policy, said. The Paris-based IEA said if the January level of compliance were […]