Oil prices posted their biggest one-day drop in nearly two years Tuesday as the International Energy Agency (IEA), the energy watchdog of the industrialised countries, again lowered its global demand forecast, to the lowest level in 5 years.
US crude fell 4.5% to $81.84 a barrel on the New York Mercantile Exchange, down 20% since the start of June and the lowest closing price since June 2012 while Brent, the global oil benchmark, dropped 4.3% to $85.04 a barrel on Tuesday, a nearly four-year low. It was Brent’s largest one-day percentage decline since September 2011.
Saudi Arabia is seeking to maintain market share despite falling prices.
The IEA Oil Market Report (OMR) for October reduced its forecast of global oil demand for 2014 by 0.2m barrels per day (mb/d) from the previous month, to 92.4 mb/d, on lower expectations of economic growth and the weak recent trend. Annual demand growth for 2014 is now projected at 0.7 mb/d, rising tentatively to 1.1 mb/d in 2015 as the macroeconomic backdrop improves.
OPEC crude oil output surged to a 13-month high in September, the monthly report informed subscribers, led by Libya’s continued recovery and higher Iraqi flows. Production rose 415,000 barrels per day (415 kb/d) from August to 30.66 mb/d. A weaker demand outlook cut the “call on OPEC crude and stock change” by 200 kb/d for 2015 to 29.3 mb/d. The “call” declines seasonally by 1.5 mb/d from the fourth quarter of this year to the first quarter of 2015.
The higher output from OPEC as well as from non-OPEC producers lifted global supply by almost 910 kb/d in September to 93.8 mb/d. Compared with a year earlier, total supply stood 2.8 mb/d higher, as OPEC supply swung back to growth and amplified robust non-OPEC supply gains of 2.1 mb/d. Non-OPEC supply growth is expected to average 1.3 mb/d in 2015.
Global refinery crude demand hit new highs in August, near 79 mb/d, with OECD runs leading the uptick. The onset of seasonal plant maintenance sees runs fall through October, taking global crude runs to 77.5 mb/d this quarter from 78.1 mb/d in the third quarter, with year-on-year growth rising over the same period to 1.4 mb/d from 0.9 mb/d.
OECD commercial total oil inventories in September built by 37.7 mb over August, to 2 698 mb, narrowing the five-year average deficit to 38.1 mb, from 67.1 mb one month earlier. Preliminary data indicate that inventories rose counter‐seasonally by 14.0 mb over September, led by a steep 11.7 mb build in middle distillates.
Highlights of the latest OMR
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