Key agency forecasts

Published at 13:11 11 Aug 2017 by

This week the key agency forecasts have been published. The EIA STEO was published Tuesday, OPEC published MOMR on Thursday and the IEA published OMR on Friday.

This month’s key agency reports mostly revised demand growth estimates for 2017 higher, although they remain lower than our estimate of 1.6 mb/d. Both the IEA and OPEC revised demand growth higher, to 1.5 mb/d and 1.37 mb/d respectively, while the EIA revised its estimate marginally lower to 1.42 mb/d. For 2018, the IEA left its demand estimate unchanged at 1.4 mb/d, OPEC revised its estimates higher to 1.28 mb/d, and the EIA revised it higher marginally by 20 thousand b/d to 1.61 mb/d. Our estimate for 2018 is similar, at 1.4 mb/d, although we expect OECD demand to drop (-0.2 mb/d), while the EIA and OPEC expect it to grow.

Non-OPEC supply growth estimates for 2017 were left unchanged by OPEC at 0.78 mb/d and the IEA at 0.73 mb/d, while the EIA hiked its estimate to 1.07 mb/d. We believe supply growth will be more muted, at 0.5 mb/d, due to declines outside of the US. For 2018, our non-OPEC supply growth estimate of 1.5 mb/d is close to that of the IEA’s at 1.4 mb/d but higher than those of the EIA (1.12 mb/d), and OPEC (1.10 mb/d), with the major difference still coming from estimates for growth outside North America. We expect stronger growth from Brazil than key agencies do.

OPEC compliance with the production deal fell in July (OPEC’s monthly report pegged it at 87%, EIA: 76% and IEA: 75%). On our estimates, compliance fell m/m to 92% from 94% in June, driven by marginally higher output from Saudi Arabia, UAE and Angola. Both Libyan and Nigerian production rose materially m/m, even though they remain outside the current deal.

The call on OPEC crude in 2017 amongst the agencies (IEA: 32.6 mb/d, OPEC: 32.42 mb/d and EIA: 32.52 mb/d) are all slightly lower than our estimates of 33 mb/d. The 2018 call remains mixed, with OPEC and the IEA at the lower end at 32.4 mb/d, while the EIA’s estimate matches ours at 32.8 mb/d. The primary discrepancy to the 2017 call is our higher demand estimate.

Preliminary data show OECD stocks drew by at least 15 mb in July to 3,000 mb, with the overhang to the five-year average falling below 200 mb to 174 mb. The draws were led by crude, with the overhang falling below 100 mb at 92 mb. Since January, the crude overhang has fallen by 106 mb through July, at a pace of 0.50 mb/d. The overhang in total commercial stocks is 153 mb lower than January. It has fallen at a rate of 0.72 mb/d since January. Due to upward revisions to 2015 and 2016 inventory levels, what has emerged is that we are drawing at a much faster pace than initially estimated, although we believe that the IEA’s downward demand revisions are dubious, particularly for Iran and Indonesia where the IEA incorrectly claim demand fell.


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