This week the key agency forecasts have been published. The EIA STEO was published on Tuesday, OPEC published MOMR yesterday and the IEA published OMR this morning.
The key agency reports for July pegged demand growth estimates for 2017 at broadly similar levels to our own of 1.5 mb/d, with the EIA trimming to 1.47 mb/d and the IEA raising its estimate back up to 1.4 mb/d. The OPEC Secretariat remains the outlier, with growth at 1.27 mb/d. For 2018, estimates are broadly unchanged at 1.3 mb/d (OPEC), 1.62 mb/d (EIA) and 1.4 mb/d (IEA). We expect growth of 1.3 mb/d, with the key difference being OECD forecasts. We expect demand for the bloc to drop by 0.2 mb/d, while the IEA has it flat, and the EIA and OPEC predict growth.
Non-OPEC supply growth estimates for 2017 were revised slightly lower by the Secretariat to 0.8 mb/d, while the EIA hiked this to 0.9 mb/d and the IEA’s call remained unchanged at 0.7 mb/d. These remain higher than our non-OPEC supply estimate of 0.5 mb/d for the year, given we expect sharper falls in non-OPEC ex-North America. For 2018, our non-OPEC supply growth estimate of 1.6 mb/d is higher than those of the EIA (1.22 mb/d), OPEC (1.14 mb/d) and IEA (1.4 mb/d), with the major difference still coming from ex-North America growth estimates (Brazil).
OPEC compliance with the production deal fell in June (OPEC’s monthly report pegged it at 95%, EIA: 79% and IEA: 78%). On our estimates, compliance fell m/m to 95%, driven by an increase in Saudi and Iraqi production, while other members were largely flat. Libyan and Nigerian production continued to increase in June, boosting overall supplies from the group sharply.
The calls on OPEC crude in 2017 amongst the agencies (IEA: 32.9 mb/d, OPEC: 32.3 mb/d and EIA: 32.5 mb/d) are all within close range of our forecast of 32.5 mb/d. The agencies upward revisions were mostly to do with the re-classification of Equatorial Guinea under OPEC supplies. The 2018 call is mixed, with the EIA at 32.8 mb/d, higher y/y by 0.22 mb/d, while the Secretariat places it at 32.2 mb/d, lower y/y by 60 thousand b/d, and the IEA at 32.8 mb/d, lower y/y by 0.1 mb/d. The IEA and EIA’s calls are similar to our own estimate of 33 mb/d, which is higher y/y.
Preliminary data show OECD stocks drew by 6.8 mb in June to 3,040 mb, with the overhang to the five-year average falling by a further 7.5 mb to below 260 mb. Since January, the crude overhang has fallen by 97 mb through June, at a pace of 0.53 mb/d, with total inventories falling by a slightly lower 0.5 mb. In May, OECD inventories fell by 6 mb to 3,047 mb in May, reducing the overhang from 300 mb to 266 mb. Commercial crude stocks reached 1,203 mb, down by 20.1 mb m/m, with counter-seasonal draws seen in all three OECD regions.