• 4 minutes Energy Armageddon
  • 6 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 12 minutes "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 4 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 20 hours Is Europe heading for winter of discontent with extensive gas shortages?
  • 4 hours "False Flag Planted In Nord Stream Pipeline, GFANZ, Gore, Carney, Net Zero, U.S. Banks, Fake Meat, and more" - NEWS in 28 minutes
  • 6 days Wind droughts
  • 12 hours ""Green" Energy Is a Scam. It Isn't MEANT to Work." - By James Corbett of The Corbett Report
  • 12 hours "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 4 days Kazakhstan Is Defying Russia and Has the Support of China. China is Using Russia's Weakness to Expand Its Own Influence.
  • 2 days Xi Is Set To Be Re-Elected As China’s Leader
  • 8 days Oil Prices Fall After Fed Raises Rates
  • 9 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 3 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 13 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
Why Oil Prices Could Continue To Fall

Why Oil Prices Could Continue To Fall

Despite the bullish news of…

China’s Oil Demand Is Finally Bouncing Back

China’s Oil Demand Is Finally Bouncing Back

China’s oil demand is about…

The Next Bullish Catalyst For Oil Markets

The Next Bullish Catalyst For Oil Markets

Oil markets were relatively unscathed…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Premium Content

IEA Doesn’t See Oil Markets Balancing Out In 2016

It is national popcorn day, so plonk yourself down in a chair with a bucket of the stuff and prepare to be entertained; it is a frenetic day in financial markets, which is making for enthralling viewing.

First up, the IEA has completed the trinity of monthly reports on the oil market (OPEC and EIA have already delivered). It makes for fairly grim reading, pointing to ‘persistent oversupply, bloated inventories and a slew of negative economic news‘ as a reason for the recent price drop, while its choice adjective to describe the potential oil market this year is ‘drowning’. The agency projects demand growth of 1.2 million barrels per day in 2016; this matches up against OPEC’s view of +1.26 million bpd, and EIA’s +1.4 million bpd.

The agency also expects supply to outpace demand this year by 1 million bpd, putting a strain on the global system to absorb it. The IEA’s estimate for non-OPEC production (read: North America) aligns with the EIA, expecting it to drop by 0.6 million bpd this year (OPEC sees -0.66 million bpd). Finally, the IEA projects that Iranian production will rise by 0.3 million bpd by the end of the current quarter, and by 0.6 million bpd by mid-year. Related: Saudi Arabia: A Weak Kingdom On Its Knees?

Onto the economic data front, and we had three key releases out of China overnight, and all three were below consensus. (Eeek). Chinese Q4 GDP came in 1.6 percent higher than the prior quarter; this was less than consensus of 1.7 percent, and lower than Q3’s +1.8 percent. Year-on-year, this equated to a 6.8 percent increase, meaning that the Chinese economy grew by 6.9 percent in 2015, the slowest pace in 25 years (<—-hence all the headlines).

Industrial production was also below par, coming in at +5.9 percent versus consensus of 6.0 percent. This is close to the slowest pace of growth in seven years. Retail sales edged lower to 11.1 percent, also below consensus (of 11.3 percent).

China Industrial production, percent YoY (source: investing.com)

Chinese consumers have more to worry about than just a weakening economy. The National Development and Reform Commission (NDRC) controls fuel prices in China, and has decided that it won’t be cutting fuel prices in line with the recent drop in oil. This is an attempt to curb consumption, as it tries to both cut pollution and secure supply. Related: The World Just Lost One Of Its Biggest Oil Plays To Low Prices

 

(Click to enlarge)

A side effect of this – and of rampant gasoline demand in China – is record refining…and product exports. Refining increased by 3.8 percent to 10.48 million bpd in 2015, according to the National Bureau of Statistics. As refining margins are strong, and as slowing growth in both industrial output and in the economy as a whole dampen diesel demand, product exports continue to make new highs: Related: The Condensate Con: How Real Is The Oil Glut?

 

(Click to enlarge)

Taking a look outside the realm of the IEA and China, we’ve had a bunch of numbers out of Europe today. Eurozone inflation came in line with consensus at a whopping +0.2 percent (YoY); this was matched by UK inflation, which was expected to be just a smidge lower at +0.1 percent YoY. Sentiment data (ZEW) out of Germany was better than expected for both current conditions and the forward six-month outlook, while countering this, broader Eurozone sentiment for the six-month outlook came in at its worst level in just over a year.

Finally, on the heels of the World Bank revising global economic growth down to 2.9 percent this year, the IMF has cut its own forecast for 2016 to 3.4 percent in its latest quarterly update. Both highlight deeper-than-expected contraction from countries such as Brazil, and the headwinds to the U.S. economy provided by a stronger dollar. Worrying indeed.

By Matt Smith

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News