According to latest IEA Oil Market Report (10 July 2015),crude oil prices fell to their lowest in nearly three months in early July, pressured by ever rising supply while financial turmoil in Greece and China unsettled world markets. At the time of writing, Brent was around $59/bbl and US WTI at $53.10/bbl.
IAE also notes, that global oil demand growth is forecast to slow to 1.2mb/d in 2016, from an average 1.4mb/d this year, with strong consumption expected in non-OECD Asia. World oil demand growth appears to have peaked in 1Q15at 1.8mb/d and will continue to ease throughout the rest of this year and into next as temporary support fades.
As far as global oil supply is concerned, it surged by 550kb/d in June, on higher output from OPEC and non-OPEC. At 96.6mb/d, world oil production gained an impressive 3.1mb/d on 2014, of which OPEC crude and NGLs accounted for 60%. Non-OPEC supply growth is expected to grind to a halt in 2016, as lower oil prices and spending cuts take a toll.
OPEC crude supply rose by 340kb/d in June to 31.7mb/d, a three-year high, led by record high output from Iraq, Saudi Arabia and the UAE, according to IEA Oil Market Report. OPEC output stood 1.5mb/d above the previous year. The 'call on OPEC crude and stock change' for 2016is forecast to rise by 1mb/d, to 30.3mb/d.
OECD industry inventories hit a record 2876mb in May, up by a steep 38.0mb. Product holdings led the build and by end-month covered 30.7days of forward demand. Global supply and demand balances suggest that the rate of global stock builds quickened rapidly to an astonishing 3.3mb/d during 2Q15.
Finally, IEA notes that robust margins spurred stronger-than-expected OECD refinery runs, lifting 2Q15global throughput estimates to 78.7mb/d. Global refinery throughputs are forecast to increase by a further 0.7mb/d in 3Q15, with annual gains shifting to the non-OECD. New capacity start-ups in 2015and 2016will put margins under pressure.
