According to a monthly update from the International Energy Agency (IEA), the global oil demand growth for 2018 has been revised slightly downwards from 1.5 mb/d to 1.4 mb/d. While recent data confirms strong growth in 1Q18 and the start of 2Q18, the IEA expects a slowdown in 2H18 largely attributable to higher oil prices. World oil demand is expected to average 99.2 mb/d in 2018.
Global oil supplies held steady in April at close to 98 mb/d. Robust non-OPEC output offset lower OPEC production. Strong non-OPEC growth, led by the US, pushed global supplies up 1.78 mb/d on a year ago. Non-OPEC output will grow by 1.87 mb/d in 2018, a slightly higher rate than seen in last months Report. OPEC crude production eased by 130 kb/d in April, to 31.65 mb/d, on further declines in Venezuela and lower output in Africa. Compliance with the Vienna Agreement reached a record 172%. The call on OPEC crude and stocks will average around 32.25 mb/d for the remainder of 2018, nearly 0.6 mb/d higher than April output.
OECD commercial stocks declined counter-seasonally by 26.8 mb in March to 2 819 mb, their lowest level since March 2015 and 214 mb below year-ago levels. In the process, they fell 1 mb below the five-year average. ICE Brent and NYMEX WTI futures prices rose to multi-year highs in recent days, and both are up by more than $ 10/bbl since the start of the year. Solid oil demand, reduced OPEC output and geopolitical developments continue to underpin price gains.
Global refining throughput is on the rise with runs expected to hit a record 83 mb/d in July-August. Throughput growth, however, is not sufficient to cover all refined products demand, with stock draws expected to persist through 2Q18 and 3Q18. The agency noted further that the decision by the United States to withdraw from the Joint Comprehensive Plan of Action regulating Irans nuclear activities has switched the focus of oil market analysis from the fundamentals to geopolitics. In these early days, there is understandable uncertainty about its potential impact on Irans oil exports, which are currently about 2.4 mb/d.