This week has seen all three of the key agency forecasts published. On Tuesday, the EIA published STEO and the OPEC Secretariat released its MOMR, while the IEA published its OMR this morning.
Looking at each of the three agency demand growth forecasts for 2019, OPEC is closest to us (forecasting growth of 1.2 mb/d, down by 0.1 mb/d on its previous monthly projection, versus our estimate of 1.0 mb/d of y/y growth). Both the IEA and EIA remain somewhat over-exuberant on the global economy and consequentially oil demand, respectively forecasting growth of 1.4 mb/d and 1.5 mb/d. One month into 2019—with now a near-complete handle on the 2018 data—it is also worth assessing how the agencies performed last year (i.e. comparing actual data for 2018 against forecasts from February 2018). Whereas we now know global demand averaged around 99.6 mb/d in 2018, one year earlier the IEA estimated 99.2 mb/d, while the EIA predicted 100.2 mb/d (definitional issues render comparisons with OPEC invalid). Our own forecast from this time last year put 2018 global demand at exactly 99.6 mb/d.
Significantly less consensus surrounds the agencies’ non-OPEC supply forecasts for 2019, with both EIA and OPEC predicting a continuation of strong gains, respectively forecasting growth of 2.6 mb/d (as the EIA raised its US production estimate sharply but missed out on Gulf of Mexico maintenance) and 2.2 mb/d, whereas the IEA takes the most conservative stance (+1.8 mb/d). Our own supply models point towards a 1.9 mb/d gain in 2019. The EIA is also the first of the three key agencies to look further afield—into 2020—predicting that the non-OPEC supply-growth party will very much continue, with production adding a further 2.1 mb/d.
Reflecting the IEA’s somewhat subdued stance on non-OPEC supplies, coupled with its over-exuberance on demand, it is by default the most upbeat of the agencies, pegging the ‘call’ on OPEC at 30.7 mb/d for 2019, vs 30.6 mb/d by OPEC and 30.3 mb/d for the EIA (we are the highest at 31.1 mb/d). The call is set to be substantially lower y/y amid rising non-OPEC supplies, but given the rising OPEC outages, with the latest coming from Venezuela, and OPEC keeping output in check at least through H1 19, the group’s production will fall short of the call on its crude. Following larger-than-usual builds in Q4 18 (led by products), preliminary stock numbers for January show a build of around 3 mb to 2,855 mb (-21 mb y/y), compared to the five-year average build of 24 mb. Crude stocks rose by 4 mb, flipping back to a deficit to the five-year average of 3 mb and lower y/y by 10 mb. Muted product stockbuilds left the deficit to the five-year average (excluding ‘other oils’) wider at nearly 30 mb.