Highlights (19 January 2016)

  • Markets were routed in December as persistent oversupply, bloated inventories and a slew of negative economic news pressured prices so that by mid-January crude oil touched twelve-year lows. At the time of writing, both ICE Brent and NYMEX WTI had sunk below $30/bbl. ICE Brent was last trading at $28.86/bbl with NYMEX WTI forty cents higher at $29.26/bbl.
  • Exceptionally mild temperatures in the early part of the winter in Japan, Europe and the US, alongside weak economic sentiment in China, Brazil, Russia and other commodity-dependent economies, saw global oil demand growth flip from a near five-year high in 3Q15 (2.1 mb/d) to a one-year low in 4Q15 (1.0 mb/d). The outlook for 2016 has demand growth moderating to 1.2 mb/d.
  • Global oil supplies expanded by 2.6 mb/d in 2015, following hefty gains of 2.4 mb/d in 2014. By December, however, growth had eased to 0.6 mb/d, with lower non-OPEC production pegged below year-earlier levels for the first time since September 2012.
  • OPEC crude output eased by 90 kb/d in December to a still-lofty 32.28 mb/d, including newly-rejoined Indonesia. Iran, now relieved of sanctions, insists it will boost output by an immediate 500 kb/d. Our assessment is that around 300 kb/d of additional crude could be flowing to world markets by the end of 1Q16.
  • Global inventories rose by a notional 1 billion barrels in 2014-15 with the fundamentals suggesting a further build of 285 mb over the course of 2016. Despite significant capacity expansions over 2016, this stock build will put storage infrastructure under pressure and could see floating storage become profitable.
  • Global refinery runs averaged 79.5 mb/d in 4Q15, down 0.3 mb/d on last month’s estimate due to lower-than-expected throughputs in Other Asia and a very high maintenance schedule in October. Global refinery margins weakened in December as middle distillate cracks fell and overwhelmed the resilience of gasoline and naphtha.
Posted in: IEA