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

The 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 0.7 million barrels per day in July to 99.4 million barrels per day thanks to increasing output in Saudi Arabia, the United States, and Russia. Output was more than 1.7 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 and by 1.85 million barrels per day in 2019.  

OPEC supplies:

• According to IEA’s calculations, OPEC production reached 32.18 million barrels per day in July, has lower supplies from Saudi Arabia got offset by increases in UAE, Kuwait, and Nigeria.
• OPEC compliance at 121 percent in July. Overall compliance to the Vienna agreement declined to 97 percent.

Global demand:

• IEA estimates demand growth has declined to 1 million barrels per day after bumper 1st quarter growth.  
• IEA expects demand to reach 100.2 million barrels per day in the fourth quarter of 2018.  
• 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 declined by 7.2 million barrels in June.
• OECD commercial stocks are currently at 2,823 million barrels, which is 32 million barrels lower than the five-year average.
• Stocks declined 171 million barrels in 2017 and down 227 million barrels from a year ago.

WTI is currently trading at $68.1 per barrel and Brent at $5.4 per barrel premium to WTI.