June’s Oil Market Report (OMR) highlights a ‘better-supplied’ rather than an ‘over-supplied’ market.
13 June 2012
It notes sharp recent falls in prices, as economic news flow has worsened. The report’s base case retains 2012 demand growth unchanged at 0.8 million barrels per day (mb/d), but highlights a low-GDP sensitivity that would result in growth of nearer 0.35 mb/d.
OECD industry stocks have recovered closer to five-year norms and 2012 has so far also seen substantial builds in stocks in emerging markets. European refining operations are constrained by weak margins, but global crude demand should rise sharply in coming months, as refiners return from maintenance and new capacity is added. Summer power generation demand and potential continued non-OECD stockpiling could boost crude demand further. Non-OPEC supply is expected to recover slowly from recent unplanned outages.
Recent OPEC output stands around 1 mb/d above the 2H12 ‘call’, but with Iran having to potentially shut-in crude over the summer as a result of sanctions, markets may remain tighter than recent fundamentals suggest.
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.