Oil in Global Economy Series: Key highlights from IEA’s MOMR

Today, International Energy Agency released its monthly oil market report. The report suggests an easing oil market. Here are the key highlights,

Global supplies:

• Global oil supplies rose by 0.37 million barrels per day in June to 99.07 million barrels per day thanks to increasing output in Saudi Arabia and Russia. Output was 1.78 million barrels per day higher than a year ago, largely due to higher production in the U.S.
• Due to the strong growth in U.S. production, IEA expects non-OPEC supply to grow by 2 million barrels per in 2018.  

OPEC supplies:

• According to IEA’s calculations, OPEC production reached 31.87 million barrels per day in June, a four-month high as higher supplies from Saudi Arabia, more than offset decline in Angola, Libya, and Nigeria.

Global demand:

• IEA estimates demand growth for 2018 at 1.4 million barrels per day, no change from its last forecast.  
• IEA also pegged its demand estimate for 2019 at 1.4 million barrels citing strong economic growth and stable prices and highlighted the risks to the forecasts, which are a higher price, trade disruption and government measures to ease price.
• However, it reports a growth of 2 million barrels per day in the first quarter.

Global inventories:

• On the inventory side, IEA report shows that OECD commercial stocks rose by 13.9 million barrels in May, the third monthly increase in a year.
• OECD commercial stocks are currently at 2,840 million barrels, which is 23 million barrels lower than the five-year average. It is also the lowest level for crude stocks since March 2015.
• Stocks declined 154 million barrels in 2017 and down 210 million barrels from a year ago.

WTI is currently trading at $71 per barrel and Brent at $3.3 per barrel premium to WTI.