The past two weeks have seen all three of the key agency forecasts published. Last week saw both the EIA publish its STEO (Tuesday) and the IEA the OMR (Friday), today OPEC released its MOMR.
The collective prognosis from the three key agencies is that 2019 demand growth is disappointing, versus earlier forecasts. The EIA stripped 70 thousand b/d from its 2019 estimate (to 1.0 mb/d), the IEA cut 0.1 mb/d (to 1.08 mb/d) and OPEC 40 thousand b/d (to 1.10 mb/d). These adjustments have been a long time coming, with the key agencies only gradually curbing their estimates since we first predicted—back in December 2018—that demand growth in 2019 would struggle to get above 1.0 mb/d. The greatest gradual adjustment has come from the EIA (removing 0.5 mb/d from its 2019 demand growth estimate since December 2018), while the IEA has removed 0.3 mb/d and OPEC Secretariat 0.2 mb/d.
This month’s releases are not all about demand growth, however, as the agencies also amended their historical series. Demand for 2018 was revised higher across the board—led by non-OECD Asia—which is something we have argued for previously. The IEA for instance managed to eliminate some of its still concerning 1.1 mb/d miscellaneous to balance (or ‘missing barrels’) for 2018 with adjustments to demand outpacing upward revisions to non-OPEC supplies.
Similarly, all three agencies revised down estimates of non-OPEC supply growth for 2019. The EIA stripped 0.15 mb/d from its estimate (to 2.13 mb/d), the IEA cut 0.11 mb/d (to 1.88 mb/d) and OPEC slashed 80 thousand b/d (to 2 mb/d). Forecasts for 2020 are converging around 2.2 mb/d with the OPEC Secretariat the outlier at 2.4 mb/d. We expect a lower growth figure of 1.7 mb/d, heavily biased towards NGLs, with the difference versus key agencies our lower estimates for non-OPEC ex-US. North American growth is set to slow to around 1.4-1.7 mb/d.
With the agencies generally revising both their demand and non-OPEC supply estimates down for 2019, each agency’s cited ‘call on OPEC crude’ show little change. The IEA predicts a drop of 0.9 mb/d (to 30.0 mb/d) in 2019, the EIA a fall of 1.1 mb/d to 30 mb/d and the OPEC Secretariat retains its elevated estimate of 30.7 mb/d. We estimate the ‘call on OPEC crude’ for 2019 at 30.3 mb/d (a y/y decline of 0.9 mb/d vs a decline of 0.7 mb/d forecast last month). For 2020, we expect the ‘call on OPEC crude’ to fall y/y by 0.5 mb/d, much like the EIA. But the IEA (-0.9 mb/d) and the OPEC Secretariat (-1.3 mb/d) are more pessimistic. The crude-only balance is far more constructive as we expect refinery runs to remain strong due to IMO 2020. So, compared to expected builds in liquids balances, crude stocks should draw again next year, by 0.5 mb/d.