This week the key agency forecasts have been published. EIA published STEO on Tuesday, OPEC published its MOMR yesterday and the IEA published OMR this morning.
For the second consecutive month, the key agencies apart from the IEA focused on lowering demand forecasts due to a weak economic outlook in the OECD. With this, all agencies continue to converge on our 2019 y/y growth forecast of 0.96 mb/d. The EIA shaved a further 90 thousand b/d from its 2019 oil demand growth forecast, with its expectations now at 0.89 mb/d y/y growth, 0.6 mb/d lower than estimates in January. Similarly, OPEC lowered its 2019 demand outlook by 80 thousand b/d from last month and now expects y/y growth of 1.02 mb/d in 2019. The IEA reduced its absolute global demand estimates by 20 thousand b/d but maintained its y/y growth estimate of 1.1 mb/d for 2019. Key agencies continue to remain too bullish on 2020 demand estimates, with the exception of the OPEC Secretariat (+1.1 mb/d), with the EIA and IEA forecasting growth at 1.4 mb/d and 1.3 mb/d, versus our expectations of 1.1 mb/d.
All the agencies revised US production lower, but this was overshadowed by upward revisions to other non-OPEC output (led mostly by Norway and FSU) in a reversal of last month’s releases. The EIA lowered its 2019 US liquids outlook by 40 thousand b/d from last month, with y/y growth now at 1.81 mb/d. OPEC forecasts cut US liquids production by 60 thousand b/d from last month, to 1.81 mb/d y/y growth. The IEA lowered its expectations for US liquids growth by 10 thousand b/d to 1.73 mb/d. Our forecast sees y/y US liquids growth of 1.83 mb/d in 2019 and 1.38 mb/d in 2020. We expect downward adjustments to 2020 US production from the EIA (+1.61 mb/d) and OPEC (+1.53 mb/d)—which cut its 2020 forecast by 0.23 mb/d—in the coming months.
The EIA and OPEC both revised down the ‘call on OPEC crude’. The EIA made the largest overall revisions, lowering its 2019 ‘call on OPEC’ by 0.23 mb/d from last month to 29.8 mb/d (-1.3 mb/d y/y), and pushing its 2019 balance to 0.2 mb/d build (up from 0.1 mb/d last month). The IEA kept its 2019 ‘call on OPEC’ flat at 30.0 mb/d (-0.8 mb/d y/y), and OPEC reduced its 2019 estimates by 90 thousand b/d to 30.6 mb/d (-1.1 mb/d y/y). Our 30.5 mb/d ‘call on OPEC’ for 2019 (-0.7 mb/d y/y) gives us a liquids draws of 0.5 mb/d. For 2020, this swings to a build of 0.7 mb/d assuming no extension to the OPEC+ agreement. NGLs and fuel oil constitute most of the 2020 liquids builds. Indeed, our crude balances remain far more constructive in both 2019 and 2020 at 0.7 mb/d and a 0.2 mb/d draw, respectively. The IEA revised May and June crude stocks substantially lower while pegging July draws at 36.7 mb and August at 34 mb, taking the deficit to the five-year average to 54 mb. However, stocks of NGLs continue to build.