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The International Energy Agency (IEA) said Friday that the low oil price is likely to trigger the largest cut in non-OPEC supply in more than two decades. The latest tumble in the price of oil, which hit a six-year low in August, is expected to cut non-OPEC supply in 2016 by nearly 0.5 million barrels per day (mb/d) – the biggest decline in more than two decades, the IEA Oil Market Report for September informed subscribers.
Lower output in the United States, Russia and North Sea is expected to drop overall non-OPEC production to 57.7 mb/d. US light tight oil, the driver of US growth, is forecast to shrink by 0.4 mb/d next year.
OPEC crude supply fell by 220 000 barrels per day (220 kb/d) in August to 31.57 mb/d, led by declines in Saudi Arabia, Iraq and Angola. The group’s output stood 1.2 mb/d higher than a year earlier. The “call” on OPEC climbs to 31.3 mb/d in 2016, up 1.6 mb/d year-on-year as lower prices dent non-OPEC supply and support above-trend demand growth.
Global oil demand growth is expected to climb to a five-year high of 1.7 mb/d in 2015, before moderating to a still above-trend 1.4 mb/d in 2016 thanks to lower oil prices and a strengthening macroeconomic backdrop.
OECD oil inventories swelled by a further 18 mb in July to a record 2 923 mb. Robust refinery throughput pushed crude stocks 9.9 mb lower, while refined products added 26.7 mb. At end-July, product stocks covered 31.2 days of forward demand, 0.6 day above end-June. Preliminary data suggest there were further builds in August.
Global refinery throughput reached a seasonal peak of 80.9 mb/d in August before the autumn turnarounds that are cutting runs through October. Refinery margins remained robust through early September, but with support shifting from gasoline to middle distillates as refiners gear up for the heating season.
The September Oil Market Report also features a detailed analysis of how the oil price rout is slamming the brakes on US light tight oil output; two other China-centered in-depth articles focus on expansion of the country’s strategic petroleum reserves and the significance of business sentiment indicators on domestic oil demand.(Source: IEA)