This week has seen all three of the key agency forecasts published. On Tuesday, the EIA published STEO, OPEC released its MOMR on Wednesday, while the IEA published its OMR on Thursday.
The EIA and OPEC Secretariat both revised 2019 non-OPEC supply growth estimates lower this month, but they remain far higher than our estimates. The EIA’s revision resulted largely from an upward adjustment to 2018 non-OPEC supplies (+0.13 mb/d), which brought its 2019 growth estimate down to 2.24 mb/d (vs 2.39 mb/d last month). The OPEC Secretariat also significantly revised up 2018 non-OPEC supply, by 0.18 mb/d, largely driven by higher estimates for the UK, Brazil and China. This brought its 2019 growth forecast to 2.17 mb/d (2.24 mb/d last month). The IEA kept its 2019 non-OPEC supply estimate broadly steady, with growth at 1.75 mb/d, still far below the other agencies’ forecasts, but closer to ours (+1.67 mb/d).
Turning to demand, we believe each agency is still underestimating the global consumption slowdown. The EIA (+1.40 mb/d) and IEA (+1.39 mb/d) led the pack in terms of 2019 growth estimates, followed by the OPEC Secretariat (+1.21 mb/d). We are far more conservative, placing growth at 1.03 mb/d, on the back of deteriorating macroeconomic conditions. On a country level, we foresee a much milder oil demand expansion in the US compared with the agencies’ views and we expect European demand to fall faster (-0.18 mb/d) than the agencies do. In fact, despite European demand plummeting by 3% y/y in February, the IEA still expects growth this year. That said, there is some upside risk to our estimates, with the Middle East, Latin America and parts of Asia performing better than expected in Q1 19.
All three agencies display an outright fall in the call-on-OPEC crude in 2019, with the OPEC Secretariat and the EIA expecting the greatest slides, of 1.1 mb/d (to 30.3 mb/d) and 0.9 mb/d y/y (to 30.4 mb/d), respectively. The IEA is still the least bearish of the trio, forecasting a more modest 0.4 mb/d y/y dip to 30.6 mb/d, closer to our estimate of a 0.4 mb/d y/y fall to 31.1 mb/d. The forecast y/y drop in the call comes amid rising non-OPEC supplies, though both Mexico and Brazil have surprised to the downside over Q1 19. Still, with Venezuelan output continuing to plummet, OPEC will continue to fall short of the call, at least over Q2 19 and Q3 19.
Following sharp draws in February, preliminary data for March show commercial OECD stocks rising by 5.9 mb m/m to 2,877 mb, as a build in Europe offset falls in the US and Japan. This would be a counter-seasonal build, increasing the overhang to the five-year average to 25 mb. Crude stocks rose by 22.2 mb, marginally higher than the five-year average build of 18.3 mb.