Global third quarter refinery runs up 1.3 mb/d from second quarter on strong OECD margins – Oil Market Report

12 September 2012

Copyright: GraphicObsession

September’s Oil Market Report (OMR) highlights signs of rebalancing of oil markets following steep price gains since late June. OECD stocks contracted this summer, first posting slower builds than normal in July, then what looks provisionally like a counter-seasonal draw in August.

For both months, the tightening of OECD inventory was led by crude – stocks of which had been relatively high – whereas product stocks, which had been very tight, posted builds.

Production outages caused global oil supply to drop by 0.1 million barrels per day (mb/d) on the month and account for part of the crude draws. The other part of the story is a steep rebound in global refining activity, especially in the OECD.  This refining response to price signals may set the stage for a rebalancing of inventories and much needed builds in product stocks ahead of winter.  

Exports of Iranian crude inched upwards to an estimated 1.1 mb/d in August from below 1 mb/d in July. Demand growth forecasts were little changed, but absolute demand levels for 2012 and 2013 were raised due to data revisions for 2011.  Low expectations of demand are such that recent OECD stock draws notwithstanding, the stock cover now looks slightly more comfortable when measured in days of demand than it did previously.

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.