A new report by the Organisation of Petroleum Exporting Countries (OPEC) says global oil demand is now estimated at 1.65 million barrel per day year-on-year to average 98.85 million barrel per day.
According to the OPEC monthly oil market report for June, Organisation for Economic Co-operation and Development (OECD) consumption is forecast to grow by 0.40 mb/d in 2018, some 0.02 mb/d higher than in May.
Meanwhile, oil demand in the non-OECD is now projected to grow by 1.27 mb/d, showing a downward revision of 0.02 mb/d from last month’s assessment. While China’s and Other Asia’s oil demand was revised up, this was more than offset by downward revisions in Latin America and the Middle East.
World oil supply
The report noted that non-OPEC supply growth in 2017 stands at 0.88 mb/d y-o-y, revised up marginally by 0.01 mb/d from last month’s assessment due to rounding. For 2018, total non-OPEC supply was revised up by 0.13 mb/d, to 59.75 mb/d, representing y-o-y growth of 1.86 mb/d.
Upward revisions were made for 1Q18 in the OECD, particularly the US and Canada, and also in the forecast of 2Q18 in the OECD, FSU and China, due to higher-than-expected output.
However, these upward revisions were offset by downward revisions the same quarters.
OPEC NGLs and non-conventional liquids’ production was revised down by 74 tb/d for 2017 to now show growth of 0.09 mb/d y-o-y and average 6.23 mb/d. For 2018, OPEC NGLs and non-conventional liquids are forecast to grow by 0.12 mb/d and average 6.35 mb/d.
In May 2018, OPEC crude oil production increased by 35,000 b/d, to average 31.87 mb/d, according to secondary sources.
The oil futures market
Crude oil futures swelled to their highest value since late 2014, with ICE Brent ending the month significantly higher above the $75/b level. NYMEX WTI also increased sharply, albeit at a slower pace than Brent, due to higher US oil production and inventories, as well as a strengthening US dollar.
The oil market was again underpinned over the month by fears of potential disruption to oil flows due to escalating geopolitical tensions, concerns about Venezuela’s crude production slipping further and with bullish drawdowns in US crude inventories.
Crude oil futures surged to their highest values in almost four years early in the month, amid geopolitical tensions.
Strong conformity from OPEC and participating non-OPEC producing countries in terms of the production adjustments through the ‘Declaration of Cooperation’ also continued to support the oil market. By the end of the month, crude oil futures drifted lower, on expectations of some supply volumes returning to the
market, as well as a surprisingly bearish read on weekly US oil stock numbers.
