The IEA’s global demand growth forecast for 2015 has risen by 600,000 barrels a day to 1.4 million, compared with the prior estimate of 1.1 million barrels a day. Total daily global demand is now forecast at 95 million barrels a day.
According to the IEA, OPEC produced 31.33 million barrels a day in May as Saudi Arabia, Iraq and the United Arab Emirates pumped crude “at record monthly rates to keep output over 1 [million barrels per day] above OPEC’s official supply target for a third month running.” Total OPEC production is at its highest rate since August of 2012.
The IEA has revised its projected supply growth for non-OPEC countries from 830,000 barrels a day in 2015 to a new total of 1 million barrels a day.
ALSO READ: OPEC Market Strategy Boosting Crude Oil Price
When OPEC released its own Monthly Oil Market Report for June on Wednesday, the cartel estimated world demand in 2015 to reach 92.5 million barrels a day. OPEC’s current supply forecast calls for non-OPEC supply to total 57.16 million barrels a day in 2015.
The IEA noted that global refinery runs decreased by 300,000 barrels a day to 77.9 million barrels in May. That lower total remains 1.7 million barrels a day higher than it was in May 2014.
From the IEA’s report:
Recent oil market strength of course partly stems from unexpectedly strong global oil demand growth, which in 1Q15 surged to 1.7 mb/d, from an average 0.7 mb/d in 2014. Demand growth alone, however remarkable, could not have been the only source of oil price support, dwarfed as it was by a surge in global liquid supply to a towering 3.1 mb/d over the same period. Despite signs of a slowdown in non-OPEC supply, notably in the US, global production growth remains exceptionally high. As a result, oil inventories have soared, but their breakdown by product and region doesn’t quite match that of demand. More than the rise in demand itself, it is that mismatch between product supply and product demand that seems to have supported prices. In particular, gasoline prices have found support from robust US demand, leading to a surge in crack spreads.
ALSO READ: Why the U.S. Government Is Adding to Strategic Petroleum Reserve
West Texas Intermediate (WTI) crude for June delivery traded down about 1.3% on the NYMEX Thursday morning at $60.65, after closing at $61.43 on Wednesday. Brent traded at $65.65 on the ICE, having closed at $66.37 Wednesday.
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