This week the key agency forecasts have been published. OPEC and EIA published MOMR and STEO yesterday the IEA published OMR this morning.
This month’s key agency reports showed the IEA revising demand growth up to 1.6 mb/d (as a result of strong data for Q2 17), inching closer to our estimate of 1.7 mb/d for 2017. The IEA’s 2018 demand growth estimate was left unchanged at 1.4 mb/d, which is in line with our own expectations, although the agency did not revise back the drastic revisions made to historical non-OECD demand last month. The EIA revised 2017 demand growth lower, to 1.3 mb/d, while revising 2018 demand growth higher, to 1.7 mb/d. The OPEC secretariat left its demand estimates unchanged at 1.3 mb/d for both 2017 and 2018.
Non-OPEC supply growth estimates for 2017 were left unchanged by OPEC at 0.8 mb/d and the IEA at 0.7 mb/d, while the EIA revised its estimates lower, to 0.9 mb/d. Our estimate remains lower, at 0.6 m/d growth for 2017, due to our expectations for declines outside of the US. For 2018, the EIA made the sharpest upward revision (by 0.3 m/d), taking its estimate to 1.4 mb/d, while the IEA revised its estimate higher to 1.5 mb/d, matching our own estimate. OPEC’s forecast of 1.1 mb/d growth for 2018 is unchanged and is on the lower end of the spectrum.
OPEC compliance with the production deal improved in August, with OPEC’s monthly report pegging compliance at 97%, the EIA at 78%, and IEA at 82%. On our estimates, compliance improved m/m to 105% from 92% in July, driven largely by lower production estimates for Saudi and Venezuelan output than the key agencies.
The ‘call on OPEC’ crude in 2017 amongst the agencies (IEA 32.7 mb/d, OPEC 32.3 mb/d and EIA 32.5 mb/d) are all lower than our figure of 33.1 mb/d in 2017, which is primarily based on a lower non-OPEC supply growth and a higher demand growth estimate. We estimate that the 2018 call will be 32.8 mb/d, while other estimates are within a narrow band—IEA 32.4 mb/d, OPEC 32.2 mb/d and EIA 32.7 mb/d.
Preliminary data for August show oil stocks drawing moderately, led by the US (-5 mb) and Japan (-0.3 mb). European stocks rose by 4 mb, even as crude stocks fell due to builds in gasoline and diesel. Floating storage drew by 25 mb according to the IEA. Based on the preliminary figures, the total OECD liquids overhang to the five-year average likely fell to 180 mb last month, compared to an overhang of 338 mb in January this year, led by products. On a days of forward cover basis, the liquids overhang fell to 62 days in August, just one above the seasonal average.