IEA sees Q4 Global Oil Supply Draw, Lowers Demand Outlook

    

   CRANBURY, N.J. (DTN) -- Global oil demand is expected to grow at a faster 
rate for the remainder of the year, having already picked up pace in July and 
August, said the International Energy Agency in their monthly Oil Market Report 
released this morning, but still revised annual demand growth for both this 
year and in 2020 lower, projecting a supply surplus early next year.

   The Paris-based agency dialed back projected world oil demand growth by 
100,000 bpd for both this year and in 2020 to 1 million and 1.2 million bpd, 
respectively, but notes the revision for this year is caused by a higher 
adjustment for global oil demand in 2018 that shrunk the year-on-year increase. 
IEA sees world oil consumption at 100.4 million bpd this year and 101.6 million 
bpd in 2020.

   Global oil demand growth is expected 1.6 million bpd higher in the second 
half of this year compared with the July through December consumption rate in 
2018, up from a 400,000 bpd year-on-year growth rate during the first six 
months of 2019.

   In July, global oil demand growth was 800,000 bpd, expanding to 1.4 million 
bpd in August. Demand growth is occurring in economies that are not part of the 
Organization for Economic Development and Cooperation, with non-OECD demand up 
1 million bpd year-on-year in July and 1.5 million bpd in August, with demand 
in China up 500,000 bpd annually.

   A lower oil price, down 30% against year ago, is seen spurring oil 
consumption, while slowing projected economic growth for 2020 prompted the 
downward adjustment in world oil consumption for next year.

   Global oil inventory is expected to expand during the first half of 2020 
with modest drawdowns projected for the second half of next year.

   IEA continues to forecast strong growth for oil producers not part of the 
Organization of the Petroleum Exporting Countries, with non-OPEC output seen up 
1.8 million bpd annually to 64.8 million bpd this year. The growth rate 
quickens in 2020 to 2.2 million bpd, with the expansion driven by the United 
States, Brazil and Norway.

   The growth in non-OPEC oil production reduces the call on OPEC demand to 29 
million bpd in 2020.

   OECD industry oil stockpiles increased 20.8 million bbl in August to 2.974 
billion bbl, 43.1 million bbl above the five-year average. OECD stored 
commercial oil supply is nearing the record reached in 2016 at more than 3 
billion bbl.

   Forward supply increased 0.6 days to 61.6 days in August, 0.6 days below the 
five-year average.

   Preliminary data indicates a 21.7 million bbl drawdown from OECD commercial 
stocks occurred in September, while floating oil in storage increased 1.8 
million bbl to 70.1 million bbl. IEA cited no change in the number of Iranian 
vessels storing oil offshore in September after a sharp increase in August.

   Global refining throughput rates declined 500,000 bpd year-on-year in the 
third quarter, lowering the annual increase in the throughput rate for 2019 to 
a paltry 150,000 bpd---a ten year low. 

   "Our refined product balances imply a counter-seasonal draw in 3Q19, as 
demand is estimated to have picked up after five consecutive quarters of almost 
no growth," said IEA.

   In 2020, crude refinery throughput increases annually by 1.2 million bpd.

   IEA notes, "Sanctions against a Chinese shipping company tightened vessel 
supply and propelled freight rates to their highest in more than ten years."

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