THE International Energy Agency (IEA) has forecast that global oil demand growth is likely to slow from 1.4 mb/d in 2016 to 1.2 mb/d in 2017, as underlying support from low oil prices wanes.
Releasing its IEA Oil Market Report (OMR) for August, the US-based body sad that while the 2017 forecast is still above-trend, it has fallen 0.1 mb/d below its previous expectations due to a dimmer macroeconomic outlook.
The report also found that crude oil prices eased to around US$45 per barrel in August as a global supply overhang weighed and demand growth weakened, after Brent crude had threatened to break below US$40 per barrel at the end of July.
The global oil supply rose by about 0.8 mb/d in July, as both OPEC and non-OPEC production increased. Output was 215 kb/d lower than a year earlier, as declines from non-OPEC more than offset an 840 kb/d annual gain in total OPEC liquids. Non-OPEC production is forecast to drop by 0.9 mb/d this year before rebounding by 0.3 mb/d in 2017.
OPEC crude oil output rose by 150 kb/d to 33.39 mb/d in July as Saudi Arabia pushed output to the highest ever and Iraq pumped more. Robust Middle East production lifted total OPEC crude supply 680 kb/d above a year ago and held output at an eight-year high.
The IEA said global refinery throughput in the third quarter is expected to rise by 2.2 mb/d from a weak second quarter to a record 80.6 mb/d. At only 0.6 mb/d above a year earlier, third quarter runs will lag expected demand growth, eroding some of the product stock cushion built up since mid-2015. Runs are forecast to decline seasonally to below 80 mb/d in the fourth quarter of 2016.
It said an OECD inventory overhang continued to shift from crude into products during June, with commercial stocks swelling by 5.7 mb to a record 3 093 mb.
Declines in crude oil holdings were offset by an above average product build of 15.9 mb, with big volumes of US propane and other NGLs moving into storage.