Besides the usual summer spike in oil demand in
the Northern Hemisphere, the opening of new refineries in the Middle East and
Asia will put pressure on prices, the International Energy Agency warned on
The Paris-based energy watchdog for 28
industrialised countries including Ireland, said in its monthly Oil Market
Report (OMR) that it expected the amount of oil processed by refineries to rise by
2.2m barrels a day between the second and third quarter of 2013 to average 77m
barrels a day.
The big increase in demand during the third
quarter will coincide with seasonal maintenance in the North Sea, likely putting
pressure on global oil prices. North Sea operators use the summer months of good
weather to carry out maintenance on the ageing offshore platforms.
"If realized, this would represent the highest runs for any single quarter on
record," the IEA said, adding the rise would also exceed both expectations of
demand growth for oil products and put a strain on supply, a combination that
would likely see an increase in product stocks that could dent refiners' profit
"Increased refining capacity may be offset by lower plant utilization rates. But
if not, crude supply would struggle to keep up with refining demand until price
effects helped rebalance the market," the IEA said.
OPEC, the oil cartel, boosted crude oil production
to a seven-month high in May as output increased from Saudi Arabia, Iran, the
United Arab Emirates and Kuwait, according to the IEA.
The 12 members of the Organization of Petroleum Exporting Countries pumped
30.89m barrels a day in May - - 40% of the world's oil -- up from 30.75m in
April, the agency said. That compares with a target of 30m that was reaffirmed
at the group’s latest meeting, last month.
“Higher output from the Gulf producers only partially offset by reduced supplies
from Iraq, Libya and Nigeria, where terrorist and militant activity continued to
undermine production levels,” the IEA said.
Saudi Arabia pumped at the highest in six months at 9.56m barrels a day in May,
rising 220,000 barrels a day from 9.34m the previous month, the IEA said. Output
increased ahead of the summer, when domestic demand for air-conditioning peaks,
requiring more crude for direct burning in power plants.
Iran exported 66% more crude oil in May than in
April, helped by a jump in purchases by China after congestion eased at the
Asian nation’s ports, the IEA said.
The report says global oil consumption would grow
this year by nearly 800,000 b/d, down slightly from 900,000 b/d last year, due
to “sluggish global macroeconomic conditions.” However, oil demand growth was
“expected to gain momentum”, forecasting that after a year-on-year rise of just
200,000 b/d in the second quarter, oil demand would rise 1.1m b/d by the end of
the year “as the underlying macroeconomy strengthens”.
Highlights of the
dated: 12 June 2013
Futures prices for benchmark
grades traded in a narrow range in May and edged lower in early June.
Bearish market sentiment prevailed throughout most of May against the
backdrop of a more anaemic economic outlook. Brent last traded at
$102.15/bbl while WTI was pegged at $94.50/bbl.
The forecast of global oil
demand growth is little changed at 785 kb/d (0.9%) for 2013.
Absolute demand estimates have been trimmed on account of revised
historical data for Russia.
Global supplies edged lower by
90 kb/d m-o-m to 91.2 mb/d in May on
Canadian maintenance, but rose by 180 kb/d y-o-y, led by OPEC NGLs and
non-OPEC supply. Maintenance will cut North Sea supplies from 3.0 mb/d
in 1Q13 to 2.6 mb/d in 3Q13. Non-OPEC supply growth is forecast at 1.1
mb/d for 2013, unchanged since last month.
OPEC crude oil supply in May
rose by 135 kb/d to 30.89 mb/d, a seven-month high.
Increased output from Saudi Arabia, Iran, the UAE and Kuwait was
partially offset by reduced supplies from Iraq, Libya and Nigeria. The
‘call on OPEC crude and stock change’ for 2H13 was trimmed by 200 kb/d
to 29.8 mb/d due to lower demand expectations.
The seasonal ramp-up in global
crude throughputs is expected to be steeper than normal this year, with
runs increasing by 2.2 mb/d from 2Q13 to 3Q13.
That seasonal increase, centred in the non-OECD, is due to new Saudi
distillation capacity, increasing Chinese runs after heavy spring
maintenance, and recovering throughput at Venezuela’s Amuay plant after
a 2012 fire.
OECD commercial oil stocks
built by seasonal 16.7 mb in April, to 2 680 mb,
led by crude oil, NGLs and refinery feedstocks. On a forwardcover basis,
OECD product stocks fell seasonally by 0.2 days, to 30.6 days.
Preliminary data suggest total oil stocks built by a further 11.1 mb in
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