World oil demand is forecast to average 95.9 mb/d in 2016, a potential increase of 1.2 mb/d versus 2015 as reasonably robust gains in non-OECD countries lead the projected expansion while OECD deliveries will be flat, he International Energy Agency (IEA) said in its Monthly Outlook released Thursday.
‘’Recent demand data came out ahead of earlier expectations, raising both 4Q15 and 1Q16 demand estimates by 0.2 mb/d. Regardless of the upgrade, 1Q16 growth at 1.2 mb/d year-on-year (y-o-y) remains well below the near five-year peak of 2.3 mb/d seen in 3Q15. Growth has eased due to lower demand in many European and North American consumers, ‘’ the monthly Outlook said.
This month’s Report examines the sharp recent slowdown in gasoil/diesel demand, highlighting how growth has fallen from a peak of 0.6 mb/d y-o-y in 3Q15 to 0.1 mb/d in 4Q15 and is forecast to turn negative in 1Q16. The end of gasoil demand growth is not yet upon us, as modest gains are forecast towards the end of the year as the underlying industrial situation improves worldwide, the report noted.
Also, the return to more normal seasonal temperatures in 4Q16 may stimulate gasoil demand.
Strong gains in India, the report added, remain one of the most persistent demand supports showing that if an economy remains fundamentally robust lower-oil prices can stimulate additional demand. Despite trimming 100 kb/d from our January Indian demand estimate, deliveries still grew by 335 kb/d versus last year.
On the supplies side, global oil supplies dropped by nearly 0.3 mb/d in March to 96.1 mb/d, with non-OPEC accounting for two-thirds of the decrease. Year-on-year (y-o-y) gains shrank to only 0.2 mb/d, from nearly 1.7 mb/d a month earlier and the 2.7 mb/d average over 2015, as non-OPEC production contracted for a second consecutive month.
OPEC crude oil production fell by 90 kb/d in March to 32.47 mb/d after a second month of supply outages from Nigeria and Iraq more than offset a further increase from post-sanctions Iran and higher flows from Angola. Supply from Saudi Arabia, OPEC’s largest producer, dipped in March but held near 10.2 mb/d.
Major oil producers are due to meet in Qatar on 17 April to discuss freezing output at levels pumped at the start of the year.
Non-OPEC oil production eased another 180 kb/d in March to 56.8 mb/d, 690 kb/d below a year earlier. Evidence that spending cuts are starting to impact on US production mount, with the latest estimates showing tight oil output falling below year-earlier levels by as much as 450 kb/d in March.
Maintenance and unscheduled outages curbed supplies in Canada and Ghana. In contrast, Russian production hit yet another high in March, standing nearly 230 kb/d above year-ago levels.
The outlook for non-OPEC production in 2016 is largely unchanged since last month’s Report, at 57.0 mb/d, which is 710 kb/d less than the 2015 average. Total US liquids production is expected to decline by 480 kb/d this year as higher Gulf of Mexico and NGL output provide a partial offset to declines in onshore crude oil production. Other notable declines are expected from China, Mexico, Colombia and Kazakhstan, while Russia, Canada, Brazil and Congo remain amongst the few countries expected to post gains this year.