Tuesday, August 29, 2017

For Oil Bulls, A Nice Report From IEA -- By The End Of 2018, Global Demand -- 100 Million Bbls/Day -- August 29, 2017

Kroger's re-opened in Houston.

That puts things into perspective. And the video shows no riots inside Kroger's.

That speaks volumes.

Now, back to oil.

Global Crude Oil Demand Growing

At least that's what the IEA is saying (dynamic link?) But how the agency says it is certainly confusing. I won't add to the confusion by trying to re-write. I will simply "cut and paste':
  • new data for non-OECD countries for 2015 reduces global oil demand by an average 330 kb/d in 2015-2018. For 2017, growth has been revised up to 1.5 mb/d, with demand reaching 97.6 mb/d
  • in 2018, growth slows slightly to 1.4 mb/d when demand will be 99.0 mb/d. In 4Q18, demand will reach 100.1 mb/d
  • in July, global oil supply increased by 520 kb/d versus June. It was the third consecutive monthly increase. Global supply is up 500 kb/d on a year ago
That first bullet is very, very confusing. Non-OECD oil demand drops a little, but OECD (?) demand grows? So, who wudda thought? 100 million bopd -- demand? I thought wind, solar, EVs, coal were the answer.

Global oil supply: up for the third consecutive month. That OPEC cut (wink, wink) is really working, huh?

Their paragraph on re-balancing is easier to read:
The re-balancing of the oil market desired by the leading producers has been a stubborn process and it takes time for the numbers to confirm what many observers instinctively feel has already happened.
Sure enough, new data suggests that in 2Q17 global stocks fell by 0.5 mb/d and preliminary data for July, particularly in the United States where stocks fell by 790 kb/d, is supportive.
Even so, we must not forget that they are falling from a very great height in volume terms. At the end of 2Q17, OECD commercial stocks, which are the component of the global total for which we have the most visibility, stood at 3,021 million barrels, still more than 219 million bbls above the five-year average although they have now fallen below 2016 levels.
As an exercise, if OECD stocks fell by 0.5 mb/d until the end of 1Q18 when the current output agreements expire they would still be about 60 mb above the five-year average.
And it should be pointed out: the five-year average includes that "very great height in volume" that occurred during the surge. 

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