Oil Market Report

Data, forecasts and analysis on the global oil market

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The IEA Oil Market Report (OMR) is one of the world's most authoritative and timely sources of data, forecasts and analysis on the global oil market – including detailed statistics and commentary on oil supply, demand, inventories, prices and refining activity, as well as oil trade for IEA and selected non-IEA countries.

Oil Market Report: 11 April 2019

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  • Our global demand growth estimates for 2018 and 2019 are again unchanged at 1.3 mb/d and 1.4 mb/d, respectively. After a slow start to the year, OECD growth will be 0.3 mb/d, with non-OECD growing by 1.1 mb/d.
  • Demand in China, India and the US is estimated to have grown by 1 mb/d in Jan-Feb 2019. OECD demand fell in 4Q18 for the first time since end-2014 and also in 1Q19, mainly on weaker European numbers, but it will recover, led by the US.
  • Global oil supply dropped 340 kb/d in March, as OPEC+ cuts deepened and Venezuelan output fell sharply. At 99.2 mb/d, it was 3.1 mb/d below November 2018 and up 530 kb/d y-o-y. In 2019, non-OPEC production will grow 1.7 mb/d versus 2.8 mb/d last year.
  • OPEC crude oil production tumbled 550 kb/d in March, to 30.1 mb/d, on further cuts from Saudi Arabia and steep losses in Venezuela. Saudi output dropped to its lowest in over two years, boosting compliance with supply cuts to 153%. The call on OPEC rises to 30.9 mb/d in 2Q19.
  • Global refining throughput fell by 2.5 mb/d in March as unplanned outages and accidents hindered the US in particular. Our 2019 growth estimate is revised down to 0.7 mb/d on tighter crude market fundamentals: 3Q19 could see the largest draws since 2011.
  • OECD oil stocks fell by 21.7 mb on the month in February after three months of increases. The decrease was more than the five-year average of 5.1 mb due to larger gasoline draws and a lower crude build. March preliminary data show a significant crude build in Europe.
  • ICE Brent reached a five-month high above $71/bbl in early April on supply concerns. New infrastructure capacity in the US helped WTI to narrow its discount to Brent to $7/bbl. Gasoline markets continued to rally, while cracks for most other refined products fell in March.

Mixed signals

The huge increase in oil production we saw in 2H18 has reversed following the implementation of the new Vienna Agreement and the increasing effectiveness of sanctions against Iran and Venezuela. Production by OPEC countries in March was 2.2 mb/d lower than in November and now there is uncertainty concerning Libya. Production by non-OPEC producers in 1Q19 was 0.7 mb/d lower than in 4Q18. This turnaround in supply has contributed to a dramatic increase in prices, with Brent crude rising from $50/bbl at the end of December to more than $70/bbl today.

Tightness in the oil market, however, is not just a supply story. In recent months, the resilience of demand has received less attention than the vicissitudes of production, but it is very important too. Data for 2018 is still incomplete but we can be confident that demand growth was about 1.3 mb/d. As far as 2019 is concerned, amongst the analyst community there is an extraordinarily wide divergence of view as to how strong growth will be. We maintain our forecast of 1.4 mb/d, but accept that there are mixed signals about the health of the global economy, and differing views about the likely level of oil prices.

In terms of real numbers for 2019, although it is still early days the major centres of oil demand growth are performing strongly. In China, the economy seems to be reacting to the government's stimulus measures with purchasing managers' indices increasing and export orders recovering, although there are signs that air cargo volumes might be falling. Preliminary oil demand numbers for the January-February period show solid growth of 410 kb/d year-on-year. Elsewhere, demand was strong in the same period, with India growing by 300 kb/d, and the US, which continues to be supported by the petrochemical sector, by 295 kb/d.

Although the main sources of growth are doing well, there are mixed signals from elsewhere. Overall demand in the OECD countries fell by 0.3 mb/d y-o-y in 4Q18, the first such fall for any quarter since the end of 2014, and it is likely to have fallen again in 1Q19 due to weakness in some European economies, with perhaps more to come if there is a disorderly Brexit. There are uncertainties in Argentina and Turkey and signs of only modest demand recovery in the Middle East despite the stimulus provided by rising crude oil prices. Concerns about trade talks linger, and the mood will be influenced by the recent downgrade to global GDP growth by the International Monetary Fund, although it should be noted that the IMF does not expect a recession in the near term. Clearly, oil prices at $70/bbl for Brent, are less comfortable for consumers than they were at the start of the year and the IEA has regularly warned of the dangers of prices rising even higher. Only time will tell if our current demand forecast proves accurate, but the risks are currently to the downside.

When the first Vienna Agreement to cut oil production was made in 2017, progress was measured by total OECD stocks falling to the five-year average level. The second Agreement is underway, and data for February show that stocks are above the average by 16 mb. However, in terms of days of forward demand cover, which is a more relevant assessment, they are below it, and have been for some time. Incidentally, it is worth mentioning middle distillate stocks, particularly in light of January's implementation of new International Maritime Organisation fuel specifications. If half the increase in marine gasoil demand resulting from the regulations were in OECD countries, about 540 kb/d, current middle distillate stocks would represent 29.3 days of forward cover, about 3.5 days below the average.

The oil market shows signs of tightening as we move into 2Q19, but we see mixed signals in terms of the outlook for demand and whether stock levels are yet "normal".



Demand data for the US and Canada in 1Q19 were weaker than expected, in particular for gasoline, probably due to harsh weather conditions. Strong demand in China and India and a recovery in growth in the Middle East provided counter-balances. Our overall projections for global demand remain largely unchanged, as we expect economic growth to pick up in the second half of 2019 in key consuming countries after a weak start. The exception is Europe for which our economic growth forecasts were lowered slightly.

In 1Q19, global oil demand growth is estimated at 1.05 mb/d y-o-y. OECD oil demand declined but non-OECD demand remained strong, provisional data showed. Harsh weather in North America slowed gasoline demand and boosted heating oil, while warm weather in Europe and Japan reduced heating. As a result, total OECD demand is likely to have dropped by 140 kb/d. OECD demand is projected to increase by 270 kb/d in 2019, supported by North America and despite the slow start to the year.

Non-OECD demand has been strong in the early part of the year, with growth estimated at 1.2 mb/d in 1Q19. In particular, non-OECD Asia demand increased by 870 kb/d with significant gains in China and India. Total non-OECD demand is projected to expand by 1.1 mb/d in 2019. Globally, we continue to forecast oil demand growth of 1.3 mb/d in 2018 and 1.4 mb/d in 2019. Non-OECD Asia and the OECD Americas will remain the fastest growing regions.



Global oil supply fell 340 kb/d in March after OPEC and non-OPEC (OPEC+) producers cut output by more than required and Venezuela racked up further losses. OPEC led the decline, with crude output falling 550 kb/d month-on-month (m-o-m) to 30.13 mb/d, down 1.4 mb/d on a year ago. At 99.2 mb/d, global output was 3.1 mb/d below a November 2018 peak. An annual gain of 0.5 mb/d on March 2018 came on the back of non-OPEC growth driven by the US.

Non-OPEC supply growth has decelerated sharply from the breakneck pace seen in 2H18 when output surged by 3.4 mb/d year-on-year (y-o-y). The pace slowed to 2.4 mb/d in 1Q19, with the US accounting for 92% compared with 80% over the course of 2018. Excluding the US, growth plunged from nearly 1 mb/d in 4Q18 to 185 kb/d in 1Q19, its lowest in a year. Moreover, output cuts in Canada and from OPEC+ producers, steep declines in the North Sea and seasonally weaker biofuels output saw total non-OPEC production in 1Q19 fall by 740 kb/d compared to 4Q18.

While non-OPEC supply is expected to rebound from 2Q19 onwards, the pace of growth is set to ease further. A slowdown in drilling activity at the start of the year, lower capital budget allocations, increasing base decline and parent-child well interference underpins our weaker growth projections for the US. Expansions in Canada, which averaged nearly 400 kb/d last year, have stalled and further declines are expected in Mexico and the North Sea. Brazil is set to rebound, however, as new units ramp up For the year as a whole, non-OPEC growth slows from last year's record 2.8 mb/d to 1.7 mb/d.

That slowdown combined with the implementation of cuts agreed by OPEC, Russia and nine other non-OPEC countries will tighten world markets. So far, OPEC+ has been very effective in terms of compliance with its 1.2 mb/d supply cuts, thanks in large part to the outperformance of Saudi Arabia. In March, OPEC+ production was 290 kb/d below the target of 44.3 mb/d, for a compliance rate of 124%.

However, OPEC is mainly responsible for this, with compliance at a remarkable 153% compared to 64% by the non-OPEC countries. Russia continues to adjust output gradually. If the producers deliver on their promises, the market could return to balance in 2Q19. The call on OPEC crude rises to 30.9 mb/d in 2Q19, roughly 800 kb/d more than the group produced in March.

OPEC and its allies called off a planned meeting on 17-18 April to review the pact and will decide instead whether to extend the cuts on 25-26 June. At that time, a clearer assessment could be made of the crisis in Venezuela and the impact of US sanctions on Iran.



Global refinery throughput in March is estimated to have plummeted 2.5 mb/d month-on-month (m-o-m) from the upwardly revised February number. Only a fraction of the expected recovery in US throughput materialised, with heavier than expected maintenance as well as industrial accidents affecting the heart of the refining industry in PADD 3. As a result, the US saw the largest annual decline since Hurricane Harvey's impact in September 2017, as March throughput fell 0.7 mb/d year-on-year (y-o-y). This helped propel gasoline cracks from negative levels to solid single-digits in March in all regions, also supported by the seasonal specification change. In a rare occurrence in recent times, gasoline strength boosted regional margins despite higher crude prices, as the seasonal element of the light distillate complex weakness wore off, just in time to offset the impact from weaker middle distillate cracks. 

Global refinery throughput is expected to start climbing towards a seasonal peak in August, increasing by 4.6 mb/d. In addition to this, our 4Q19 forecast incorporates start-ups of several major projects, boosting y-o-y growth to 1.2 mb/d. This upward climb may, however, face strong headwinds from increasingly tight crude markets (see Global crude oil and products balances). Our forecast for global refinery intake growth in 2019 has been revised down by 0.4 mb/d to 0.7 mb/d, to reflect unfavourable crude market fundamentals, particularly in the second half of this year. Meanwhile, most of the growth continues to be East of Suez, with China and the Middle East accounting for the bulk of it. In 2018, China overtook OECD Europe in terms of refining activity levels and is set to pull further ahead this year.

Global crude oil and products balances

In 4Q18, global oil balances show a massive build of 2.4 mb/d, as supply surged to almost 102 mb/d, while demand stayed below 100 mb/d. This was the largest build observed in our quarterly balances since 2008. The breakdown shows that most of the build was in crude oil, as refining activity was particularly low, with global crude runs falling 0.4 mb/d y-o-y. Nevertheless, refined product balances also built, by about 0.9 mb/d, while non-refined products (OECD LPG and ethane stocks) drew by 0.8 mb/d.

The global crude oil balance of 2 mb/d in 4Q18 was the largest since 1Q08. OECD stocks remain the only reliably reported data, and these increased by just 0.3 mb/d, leaving the bulk of the build unaccounted for by official statistics. Chinese crude balances amounted to 1.1 mb/d (after deducting a total of 0.4 mb/d of direct use and potentially underreported runs). Crude oil in transit increased by about 0.2 mb/d in 4Q18. This implies a 0.4 mb/d crude build in the rest of non-OECD. 

The recovery of oil prices from the nadir of $35/bbl in 1Q16 occurred in two legs. First, a rise to $50/bbl in 4Q16, a level that was workable for most of the US shale production. Afterwards, seven consecutive quarters of flat or drawing crude balances took Brent to $75/bbl in 3Q18. The builds in 4Q18-1Q19 caused a cumulative $10/bbl drop in quarterly average prices, with daily prices swinging in a much wider range ($86/bbl in early October to $50/bbl at the end of the year).

However, upward pressure on crude prices has resumed as the crude balance will likely draw for the rest of the year assuming the Vienna Agreement and sanctions against Iran and Venezuela remain in place. While the large 4Q18 unobserved stock changes have revived the topic of "missing barrels" in historical data, the near-term balances are pointing at real missing barrels, needed to plug the gap particularly in 3Q19 crude supply-demand balances.


Despite the $2/bbl increase in crude prices in March, refining margins were up m-o-m in all regions on extensive refinery shutdowns in the US. US Gulf Coast margins rebounded particularly strongly as PADD 3 refining fell 0.4 mb/d y-o-y. Globally, the main support came from gasoline cracks, which surged from negative levels in February on supply disruptions and the switch to more expensive summer grades in Europe and the US. Middle distillate cracks, meanwhile, moved lower m-o-m with the conclusion of the northern hemisphere heating season, and before summer travel demand kicks off, which is beneficial to European diesel and jet fuel demand. Fuel oil cracks were stronger m-o-m in Europe, reflecting high feedstock demand in the Atlantic Basin. However, in Singapore, fuel oil cracks started subsiding, returning to negative levels on a monthly average basis for the first time since October.



OECD industry stocks fell by 21.7 mb month-on-month (m-o-m) in February to 2 871 mb, the first reduction after three months of increases. Stocks fell by more than the five-year average of 5.1 mb for the month due to larger-than-usual gasoline draws and a lower-than-seasonal build in crude holdings. Total stocks remain 16 mb above the five-year average, but on a forward demand basis they are below it, by 1.1 day, at 60.6 days.

Crude stocks rose 10.4 mb on the month in February to reach 1 103 mb, which is close to last year's level. However, the gain was lower than usual for the time of year as OECD Americas drew counter-seasonally by 4.2 mb while OECD Europe built crude oil stocks by 7.5 mb and OECD Asia Pacific also gained by 7.1 mb. Stocks of oil products fell by 30.2 mb to 1 440 mb. Gasoline stocks declined by 9.5 mb versus a normal 0.8 mb increase. Middle distillates draws were 5.8 mb compared with normal 10.3 mb.

Preliminary data for March are mixed, as a build in Europe offset inventory falls in the US and Japan. US inventories declined by 15.6 mb in total due to lower refinery throughput and amid continued high crude exports. Japanese preliminary data fell by 5.4 mb m-o-m, which is mainly attributable to falling stocks of middle distillates. European stocks, on the other hand, increased by a significant 26.9 mb due to 22.8 mb of crude inventory build.

For January, OECD stocks were revised up by 11.5 mb. The biggest adjustment was a 20.1 mb upward revision for product stocks in Europe, particularly middle distillates in Spain and Turkey. December stock figures were revised down by 2.5 mb.


Market overview

Oil prices increased for the third consecutive month in March. Tighter global supplies due to strong compliance with Vienna Agreement cuts, sanctions against Venezuela and Iran and unrest in Libya offset bearish factors such as concern over the health of the global economy. In early April, ICE Brent Futures settled above $70/bbl for the first time since November 2018, having risen by over 30% since the start of 2019. NYMEX WTI futures have gained 40% so far in 2019, narrowing WTI's discount to Brent to $7/bbl at the time of writing, as US infrastructure constraints eased. Gasoline prices moved higher, particularly in the US, where the price of super unleaded on the Gulf Coast rose by 22.5% month-on-month (m-o-m). Support came from the switch to summer-specification fuel in the US and Europe, while supplies tightened due to refinery shutdowns and maintenance. Higher crude prices and weaker demand saw a fall in cracks for most other refined products.