IEA releases Oil Market Report for June

Lower non-OPEC output trims global supply, but production still steeply higher than last year

11 June 2015

Global oil supplies fell by 155 000 barrels per day (155 kb/d) in May to 96 million barrels per day (mb/d) on lower non-OPEC output, but remained at a steep 3 mb/d above the level of May 2014, the IEA Oil Market Report (OMR) for June informed subscribers. Annual growth slowed marginally from March and April and remained roughly split between non-OPEC and OPEC countries. The June issue raised the forecast of non-OPEC supply growth for 2015 by 195 kb/d to 1 mb/d.

OPEC supply edged up 50 kb/d in May to 31.33 mb/d, the highest rate since August 2012. Saudi Arabia, Iraq and the United Arab Emirates pumped at record monthly rates to keep output more than 1 mb/d above OPEC’s official supply target for a third month running. Oil ministers agreed to maintain that target at their 5 June meeting.

The estimate of global demand growth has been revised up to 1.7 mb/d for the first quarter of 2015 and 1.4 mb/d for all of 2015. Momentum is expected to ease somewhat the current quarter, assuming a return to normal weather conditions and given the recent partial recovery in oil prices.

Global refinery crude runs reached an estimated 77.9 mb/d in April, 0.3 mb/d lower than March, and 1.7 mb/d above a year earlier. Delayed new capacity of 1.5 mb/d in non-OECD regions has lifted product cracks and OECD refining utilisation rates, and caused backwardation to re-appear in oil products markets. (Backwardation is the market situation in which futures prices are progressively lower in the distant delivery months.)

OECD industry oil stocks built by a steep 38.0 mb in April, to stand 147 mb above average levels, as refined-product stocks moved to their widest surplus in more than four years. Preliminary data indicate that OECD inventories added a further 12.6 mb in May, though US crude stocks posted their first draw in nine months.

The June OMR also addresses the demand outlook for the second half of 2015 as well as provides subscribers with special in-depth insights on lower sulphur specifications for road fuels; freight rates; and how tanker owners are profitting from the new reality in oil markets.

The Oil Market Report 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.

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