The latest Oil Market Report (OMR) notes June/July price volatility, based on supply-side concerns affecting Iran and Norway, but also ongoing worries over sovereign debt issues in the eurozone.
12 July 2012
Prices remain high, although supply ran well ahead of demand during the second quarter of 2012. Stock builds in the OECD have remained muted, suggesting that substantial volumes may have moved into floating storage and/or non-OECD inventory.
Projections for 2013 are presented for the first time, showing modest economic recovery next year could generate demand growth of 1.0 million barrels per day (mb/d), compared to 0.8 mb/d in 2012. Growth in non-OPEC supply (+0.7 mb/d in 2013) plus 0.3 mb/d of incremental OPEC natural gas liquids, should match demand growth, leaving an underlying ‘call on OPEC crude and stock change’ for 2013 that is identical to 2012’s level of 30.5 mb/d.
Distillation capacity additions of a combined 2.3 mb/d in 2012 and 2013 outweigh likely demand growth, implying OECD refining profitability will remain under pressure. OPEC crude capacity increases by only 0.25 mb/d in 2013, as sharp decline from sanction-hit Iran counteracts increases in Iraq, UAE and Angola.
The Oil Market Report (OMR) is a monthly International Energy Agency publication which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead. To subscribe, click here.