Global oil demand growth will increase from a very weak level of 310 thousand b / d in 1Q19 and 800 thousand b / d in 2Q19. This will reach 1.8 million barrels per day (MBD) in the second half of this year as economic activity improves and petrochemical plants increase. In 2020, the growth rate will average 1.4MBD compared to 1.2MBD this year.
Our balance sheet shows the potential for oversupply next year, with an expansion of 2.1 MBD for non-OPEC supplies, led by the United States, compared to 2 MBD in 2019. That will reduce oil demand from OPEC, with capacity being reduced to 28 MBD in 1Q20 . OPEC has not been produced at low levels since 3Q03.
The performance of global refining in 2Q19 fell 0.7 MBD, the biggest annual decline in 10 years. Our estimate for growth in 2019 was revised to 300 thousand bd, but the stock of processed products increased. The East Suez refinery is more vulnerable to oversupply of products, while operations in the Atlantic basin are receding to 2014 levels.
OECD business inventories increased 22.8 MB in May to 2,906 MBD and were at 6.7 MBD above the five-year average. Preliminary data for June showed that inventories fell in the United States and Japan, while stocks increased in Europe.
Concerns over slowing global oil demand caused ICE Brent to drop 10% in June, despite geopolitical support factors.
Market rebalancing is slowing down
The main message of this Report is that in 1H19 oil supplies exceeded demand by 0.9 million barrels per day (MBD). Our latest data shows a global surplus in 2Q19 of 0.5 MBD compared to previous expectations of a deficit of 0.5 MBD.
This surplus adds to the large accumulation of stock in the second half of 2018, when oil production skyrocketed as demand growth began to falter. Clearly, the tightness of the market is not a problem at the moment and rebalancing seems to have advanced in the future.
Meanwhile, the initial decision of the Minister of the Organization of the Petroleum Exporting Countries (OPEC) plus its allies, to extend its production agreement until March 2020 provides guidance.
However, the fundamental perspective of markets with excess supply has not changed. On our balance sheet, assuming that OPEC production remains constant at the current level of around 30 MBD at the end of 1Q20, inventory can increase by 136 MB net. OPEC oil demand in early 2020 could only drop to 28 MBD.
Clearly, this presents a big challenge for those who have taken on the task of market management. The picture will develop as 2019 progresses, but in the short term, the main focus area is still demand growth. That caused the energy stocks went down on 2019 and traders changed their way, focusing on other stocks alternatives like online gambling or gold.
Although the GDP estimate behind the IEA forecast has not changed in connection with last month’s report, there are indications of a setback in trade and manufacturing activity. Recent data shows that world manufacturing production in 2Q19 fell for the first time since the end of 2012 and new orders have declined at an accelerating pace.
On the positive side, the environment around trade disputes between the United States and China appears to have improved and the pending resolution of problems will be a big boost for economic confidence.
The outlook for oil demand growth in 2019 has changed little compared to our latest Report at 1.2 MBD. On the basis that the economic outlook for 2020 is better, there will be a rebound of 1.4 MBD. This is despite the fact that we have lowered our estimates for world oil demand growth in 2Q19 at 0.45 MBD.
There are many reasons for this: European demand is slow; growth in India faded in April and May due to slowing liquefied gas shipments and weakness in the aviation sector; and in the United States, the demand for gasoline and diesel in the first half of 2019 is lower from year to year.
Unless the economic context and trade disputes worsen, global growth is expected to be higher in 2H19. There will be support for oil prices, which, if they remain roughly as they are today, will be around 8% below the level seen last year.
Like our Facebook Page
How to Raise Money for Your Non-Profit or Charity: 7 Steps to Take
Solar-Powered Solutions for Lowering City Infrastructure Carbon Footprint
How to Prioritize Sustainability When Studying Abroad
EHS Management is Making the Construction Industry Greener
Best Sustainable Practices in the Construction Industry in 2024
Comparing Renewable Energy: Solar Power, Wind, Hydro & Bio
Maximizing Home Efficiency: The Renewable Way
10 Easy Ways To Make Your Home More Eco-Friendly
Energy Management Mastery: 4 Tips for Green Property Owners
Wonderful Ways to Make Your University Lifestyle Greener
Insider Tips for an Eco-Friendly Dubai Vacation in 2024
Polythene Bags and Food Safety: Crucial Role in Food Packaging
5 Tips for Creating a Sustainable Living Space
Solo Eco-Tourism Misconceptions That Need To Be Debunked
How Can Field Service Companies Reduce Their Carbon Footprint?
Embracing Sustainability: 7 Tips for Eco-Friendly Shopping
Crypto Market Makers Are Becoming More Eco-Friendly
Eco-Friendly Benefits of Energy Efficient Mortgages
Experience Thailand at Sea Yacht Chartering as an Eco-Tourist
5 Reasons Eco-Tourists Should Plan a Barcelona Getaway
- Features8 months ago
What is the Eco-Friendliest Option to Wash Your Dishes?
- Environment12 months ago
6 Home Improvements You Can Make to Help the Environment
- Editors Choice11 months ago
7 Tips to Minimize the Negative Impact Businesses Have on the Environment
- Environment12 months ago
The Truth About The Environmental Impact of Dogs