IEA: Price of Oil Continues its Downward Spiral As Rising Supplies Collide With Weak Demand Growth

The price of oil continued to collapse into January as rising supplies collided with weak demand growth and OPEC maintained its commitment to not cut production. Brent crude futures last traded at $48.40/bbl, near a six‐year low. NYMEX WTI was at $47.75/bbl.
Macroeconomic weakness continues to restrain global oil demand growth, with 4Q14 deliveries estimated just 0.6 mb/d above yearearlier levels. Despite lower prices, demand growth is only forecast to accelerate to 0.9 mb/d in 2015, unchanged since last month’s Report.
The oil selloff has cut expectations of 2015 non‐OPEC supply growth by 350 kb/d since last month, to 950 kb/d. Effects on North American supply are so far limited to 95 kb/d and 80 kb/d to the Canadian and US forecasts, respectively. Projections for Colombia are cut by 175 kb/d and a further 30 kb/d for Russia.
OPEC output rose by 80 kb/d in December to 30.48 mb/d, as Iraqi supply surged to 35‐year highs, offsetting deeper losses in Libya. Downward revisions to the non‐OPEC supply outlook raise the ‘call’ on OPEC for 2H15 to an average 29.8 mb/d – just shy of OPEC’s official target of 30 mb/d.
Global refinery crude throughputs surged to a new record high of 78.9 mb/d in December, lifting the 4Q14 estimate to 78.2 mb/d. Throughputs are forecast however to ease seasonally to 77.8 mb/d in 1Q15 amid brimming product inventories, weakening margins, lower demand and increased refinery maintenance.
OECD commercial inventories drew less than usual in November, falling by 8.7 mb to 2 697 mb. As OECD refiners hiked runs, crude stocks drew while product stocks increased. Preliminary data indicate a 12.5 mb build in December, which would see stocks rise to their widest surplus versus the five‐year average since August 2010.