The International Energy Agency (IEA) revised down on Thursday its 2017 forecast for world oil demand growth amid a dimmer outlook on the global economy, somewhat echoing OPEC's "lingering concerns" that refiners in the U.S. and Europe may cut processing rates.
The world's leading energy body, IEA, said in its monthly Oil Market Report that it expected global oil demand growth to slow down from 1.4 million barrels a day (mb/d) in 2016 to 1.2 million barrels a day in 2017. The forecast for next year - albeit still above-trend - is a downward revision of 100,000 barrels a day from IEA's previous forecast last month, due to a "dimmer macroeconomic outlook."
Crude prices went down earlier this month as a global supply overhang pressured the market and demand growth slowed. In July, global oil supply increased by some 800,000 barrels a day, with both OPEC and non-OPEC output growing, the IEA said.
Still, output was 215,000 b/d down from a year ago, with non-OPEC production decline more than offsetting the 840,000 b/d annual increase of OPEC's output. Production of countries outside OPEC is projected to fall by 900,000 b/d in 2016, before resuming to grow by 300,000 b/d in 2017.
Last month, OPEC's output went up by 150,000 b/d to 33.39 million b/d, as Saudi Arabia -- the group's biggest producer -- increased production to all-time highs and Iraq pumped more, with total OPEC output at an eight-year high, the IEA noted.
On Wednesday, it was OPEC's turn to issue its monthly report, in which it upgraded its 2016 projections for world oil demand growth to 1.22 million barrels a day (mb/d), up by 30,000 b/d from its previous estimate, but warned that there were "lingering concerns" that refiners in the U.S. and Europe may cut processing rates, which could decrease the demand for crude.
Now, the IEA - which had already flagged very high levels of refined products sitting in storage in its July report, said: "The massive overhang of stocks is also keeping a lid on prices, with both newly produced and stored crude competing for market share in an increasingly volatile refinery margin environment."
Shifting our focus toward the U.S., the Energy Information Administration (EIA) reported on Wednesday a 1.1-million-barrel rise in commercial crude oil inventories for the week to August 5. The total reached 523.6 million barrels-a record-high for the season. The week prior, crude oil inventories were up 1.4 million barrels. Refineries processed 16.6 million barrels daily, with gasoline production averaging 10.1 million barrels per day. Refineries operated at 92.2 percent of capacity, processing 255,000 barrels less than in the week to July 29. Related: Militants Blow Up Oil Well in Iraq's Northern Kirkuk Province
Commenting on the North American data in the IEA's Oil Market Report, Cornerstone Analytics Morning Energy Update for August 11 flagged huge discrepancies between the IEA figures between Canada's oil stocks and the change in Canadian oil output in the second quarter this year. From April to June 2016, wildfire-related outages led to 68.4 million barrels of production to be forfeited, Cornerstone Analytics said. Yet, the IEA reported that Canada's oil inventories increased by 6.4 million barrels in Q2.
Image courtesy of Cornerstone Analytics Morning Energy Update
According to Cornerstone Analytics: "US oil imports from Canada stayed steady over the quarter which further reinforces our view that the IEA data for the North America region appears (well, not to use too ugly a word) fraudulent."
Cornerstone Analytics deems the other regional oil inventory data for the second quarter "appears OK".
This week's monthly and weekly reports on global and regional oil demand growth and inventories have been piling up on top of rumors - resurfaced and revived once again - that OPEC may try to lift off low crude oil prices with some sort of output freeze.
At the time of writing, WTI Crude traded up 3.38 percent at US$43.12 and Brent Crude was rising 3.41 percent to US$45.55.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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