comparative analysis of monthly reports on the oil market€¦ · comparative analysis of monthly...

AN INTERNATIONAL ENERGY FORUM PUBLICATION JANUARY 2020

RIYADH, SAUDI ARABIA | JANUARY 2020

COMPARATIVE ANALYSISOF MONTHLY REPORTS ON THE OIL MARKET

| COMPARATIVE ANALYSIS OF MONTHLY REPORTS ON THE OIL MARKET | RIYADH, SAUDI ARABIA | JANUARY 2020

SUMMARY FINDINGS FROM A COMPARISON OF DATA AND FORECASTS ON THE OIL MARKET BY THE INTERNATIONAL ENERGY AGENCY (IEA) AND ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES (OPEC).

1. NOTE BY THE SECRETARY GENERAL 2

2. KEY POINTS 3

32.1 DEMAND

2.2 SUPPLY

2.3 STOCKS

2.4 SNAPSHOT (mb/d)

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3.1 DEMAND DATA

3.2 SUPPLY DATA

3.3 STOCK DATA

3.3.1. GLOBAL STOCK ANALYSIS

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3. GLOBAL ANALYSIS 5

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FEATURING A COMPARATIVE ANALYSIS OF OIL INVENTORY DATA REPORTED BY JODI, THE IEA, OPEC AND SECONDARY SOURCES IN COLLABORATION WITH THE RAPIDAN ENERGY GROUP.

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| COMPARATIVE ANALYSIS OF MONTHLY REPORTS ON THE OIL MARKET | RIYADH, SAUDI ARABIA | JANUARY 2020 2

1. NOTE BY THE SECRETARY GENERAL

The IEF conducts a comprehensive comparative analysis of the short-, medium-, and long-term energy outlooks of the IEA and OPEC, to inform the IEA-IEF-OPEC Symposium on Energy Outlooks that the IEF hosts in Riyadh as part of the trilateral work programme on a yearly basis.

To inform IEF stakeholders on how perspectives on the oil market of both organisations evolve over time more regularly, this monthly summary provides:

• Key findings and a snapshot overview of data points gained from comparing basic historicaldata and short-term forecasts of the IEA Oil Market Report and the OPEC Monthly Oil MarketReport.

• A comparative analysis of oil inventory data reported by JODI, the IEA, OPEC and secondarysources in collaboration with the Rapidan Energy Group.

Moreover, international developments this month that will have an impact on oil market balances are as follows: Geopolitical Instability

• Major incidents and further falling oil exports from Venezuela and Libya have not impacted global oil markets excessively in the short-term due to abundant supply, strategic inventories above five-year averages, and weaker oil demand growth in a slowing global economy. However, continued instability can impact energy security and market stability in the medium-, and long-term if imbalances are entrenched. The outbreak of the Coronavirus is also adding instability to the market and affecting short-term demand. However, its full impact will be more visible in the next few months.

Natural Gas Pipelines

• Greece, Cyprus, and Israel signed a deal on 2 January to build a 1900 km sub-sea pipelineto carry natural gas from the Eastern Mediterranean to Europe. Meanwhile, Turkey and Russialaunched the Turkish Stream pipeline on 8 January which will carry Russian natural gas tosouthern Europe through the Black Sea and Turkey.

US-China Trade Conflict

• China and the United States have signed a Phase 1 trade deal under which the United Statesreduced some tariffs on Chinese goods in exchange for Chinese pledges to purchase moreAmerican goods that includes energy products. China has committed to buying at least $52billion in additional energy purchases over the two years, from a baseline of $9 billion in 2017.

I trust this month’s analysis helps to sharpen focus on evolving short-term market perspectives.

Dr Sun XianshengSecretary General

International Energy Forum


2. KEY POINTS

2.1 DEMAND

• OPEC and the IEA’s world demand growth projections increase for 2020. OPEC growth assessments have increased by 240 kb/d to reach overall demand growth of 1.22 mb/d. The IEA increased its forecast by 230 kb/d for overall growth of 1.19 mb/d. The IEA and OPEC estimates for absolute world demand have broken the 100 mb/d barrier and are now 101.45 mb/d and 100.98 mb/d, respectively.

• The IEA and OPEC disagree on Non-OECD demand growth for 2020. The IEA’s estimate for non-OECD demand growth decreases by 120 kb/d to reach a total growth of 0.92 mb/d, while OPEC’s growth estimate increases by 180 kb/d for a total growth of 1.13 mb/d. The IEA’s OECD growth increased by 340 kb/d for total growth of 0.27 mb/d, while OPEC growth increases by 70 kb/d for overall growth of 0.09 mb/d. The IEA and OPEC differ by 210 kb/d and 180 kb/d on non-OECD and OECD demand growth, respectively.

2.2 SUPPLY

• Both OPEC and the IEA forecast non-OPEC supply growth for 2020. The IEA’s January 2020 assessment for non-OPEC growth is up by 240 kb/d to reach 2.13 mb/d while OPEC’s growth assessment has increased by 530 kb/d for a total growth of 2.35 mb/d. In absolute values, the IEA and OPEC estimate non-OPEC supply at 67.03 mb/d and 66.68 mb/d respectively for 2020. The IEA reports OECD growth at 1.83 mb/d, an increase of 300 kb/d from last month. OPEC also records OECD growth at 1.83 mb/d, an increase of 290 kb/d from December 2019. In absolute values, the IEA and OPEC estimate OECD supply estimates at 30.29 mb/d and 31.74 mb/d, respectively.

• The IEA and OPEC disagree on non-OECD supply growth for 2020. The IEA’s growth assessment remained the same as last month at 0.18 mb/d while OPEC revised its assessment by 20 kb/d to reach 0.46 mb/d. In absolute values, IEA and OPEC non-OECD supply estimates are 31.48 mb/d and 32.61 mb/d respectively for 2019.

2.3 STOCKS

• The IEA and OPEC continue to report strong alignment on stock figures. The IEA reports OECD stock levels at 2912 mb, which is close to OPEC’s assessment of 2920 mb for OECD stock that is 8.9 mb below and 17.5 mb above the five-year average, respectively. The divergence between OPEC and the IEA stands at 8 mb for January. Total US crude inventories (excluding SPR) amount to about 432 mb according to the US Energy Information Administration (EIA). The EIA reports U.S. crude oil inventories are 2 percent below the five-year average for this time of year. OPEC reports US stocks below the five-year average by about 1 mb.


2.4 SNAPSHOT (mb/d)

Demand OECD Growth ∆ m/m

Non-OECD Growth ∆ m/m World Growth ∆ m/m

IEA 48.02 0.27 0.34 53.44 0.92 -0.12 101.45 1.19 0.23

OPEC 48.08 0.09 0.07 52.90 1.13 0.18 100.98 1.22 0.24 Difference 0.06 0.18 0.27 0.54 0.21 0.30 0.47 0.03 0.01

Supply OECD Growth ∆ m/m

Non-OECD Growth ∆ m/m NOPEC Growth ∆ m/m OPEC Growth ∆ m/m

IEA 30.29 1.83 0.30 31.48 0.18 0 67.03 2.13 0.24 29.44 -0.18 0.09

OPEC 31.74 1.83 0.29 32.61 0.46 0.20 66.68 2.35 0.53 29.44 -0.16 0.03 Difference 1.45 0 0.01 1.13 0.28 0.20 0.35 0.22 0.29 0 0.02 0.06

Stocks (mb) OECD US OECD to 5-

Year Average US to 5-Year Average

IEA 2912 - 8.9 mb above - OPEC 2920 431 17.5 mb above 0.7 mb below

EIA 432 - 2 percent below

Data obtained from IEA Oil Market Report, 16 January 2020; OPEC Monthly Oil Market Report, 15 January 2020 and Energy Information Administration, Weekly Petroleum Status Report, 29 January 2020

*Totals in table may not exactly reflect content due to independent rounding.


3. GLOBAL ANALYSIS

3.1 DEMAND DATA

• Absolute Demand

ο The IEA’ s estimate for global demand growth increased by 230 kb/d to 1.19 mb/d for an absolute demand of 101.45 mb/d in 2020. Demand growth for 2020 continues to be driven by continuing demand growth in non-OECD Asia which the IEA reports at 0.83 mb/d.

ο OPEC’s global demand outlook also increased modestly higher by 240kb/d for a total growth of 1.22 mb/d in 2020. Absolute demand is now above the 100 mb/d mark at 100.98 mb/d.

• OECD Demand

ο The IEA sees OECD oil demand growth at 0.27 mb/d, up from last month’s figure of -0.07 mb/d driven primarily by Europe and the Americas. The IEA anticipates total OECD consumption for 2019 at 48.02 mb/d.

ο OPEC’s growth projection for the OECD region increases by 70 kb/d to 0.09 mb/d in total demand growth with total OECD demand for 2019 at 48.08 mb/d.

IEF comparative analysis of IEA and OPEC Monthly Reports on the Oil Market January 2020

IEA and OPEC world demand growth increases in 2020IEA and OPEC disagree on OECD and Non-OECD demand growth

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Monthly Revisions of Annual Estimates for Oil Demand Growth 2019/18 and 2020/19 from January 2020

IEA (Total Non-OECD) IEA (Total OECD) IEA (World)

OPEC (Total Non-OECD) OPEC (Total OECD) OPEC (World)

IEA and OPEC demand assessments for the year 2020 issued in January are being compared to assessments from 2019. The increase in demand applies to yearly assessments and has no bearing on monthly adjustments. Hence, the increase may seem exaggerated.

See the graph below for the monthly revisions of IEA and OPEC annual estimates for 2019 and new estimates for 2020 demand.

*monthly estimates rounded to the nearest barrel.


• Non-OECD Demand

ο The IEA and OPEC anticipate continued growth in non-OECD demand for this year at 0.92 mb/d and 1.13 mb/d, respectively. The discrepancy is largely due to a difference in Middle East oil demand that may see a greater role for natural gas. Total non-OECD demand forecasts average 53.44 mb/d and 52.90 mb/d, respectively.

ο China Demand

■ According to the IEA, China’s oil demand from January-November, demand in China rose 615 kb/d y-o-y, driven largely by transport fuels and petrochemical demand. Demand growth is forecasted to slow to 0.44 mb/d in 2020 after growth of 0.64 mb/d in 2019.

■ According to OPEC, China’s demand is projected to be 0.35 mb/d in 2019 dropping to 0.33 mb/d in 2020 with most demand coming from the petrochemical and transport sector. Quality fuel programs targeting fewer emissions and the increasing role of natural gas are expected to impact demand in 2020.

ο India Demand

■ According to the IEA, India’s oil demand rose by 535 kb/d in November as the ending of the monsoon rains lead to a demand re-adjustment. Overall demand growth in 2020 is forecast to be 0.17 mb/d compared to 0.16 in 2019.

■ According to OPEC, India’s oil demand increased in November by 0.51 mb/d y-o-y (year-over-year) – the strongest level of growth since March 2016 and the highest level of total demand ever recorded at 5.38 mb/d. Overall, Indian demand growth is 0.12 mb/d for 2019 with an increase to 0.16 mb/d in 2020.



IEA and OPEC see increase in Non-OPEC supply growth in 2020 IEA and OPEC disagree on Non-OECD supply growth

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Monthly Revisions of Annual Non-OPEC Liquids Supplies Estimates 2019/18, and 2020/19 from January 2020

IEA (OECD) IEA (Non-OECD) IEA (Total Non-OPEC Supply)

OPEC (OECD) OPEC (Non-OECD) OPEC (Total Non-OPEC Supply)

IEA and OPEC production assessments for the year 2020 issued in January are being compared to assessments from 2019. The increase in production applies to yearly assessments and has no bearing on monthly adjustments. Hence, the increase may seem exaggerated.

3.2 SUPPLY DATA

See the graph below for the monthly revisions of IEA and OPEC annual estimates for 2019 and new estimates for 2020 supply.*monthly estimates rounded to the nearest barrel.

• Non-OPEC Supply

ο OPEC’s January assessment of total non-OPEC supply for 2020 stands at 66.68 mb/d. Supply growth remains the same for the third consecutive month at 2.35 mb/d driven by the US (1.43) Norway (0.29 mb/d), Brazil (0.29 mb/d), Canada (0.10 mb/d).

ο According to the IEA, the US, Brazil, and Norway will underpin non-OPEC expansion in 2020. The IEA forecasts non-OPEC supply at 67.03 mb/d with growth of 2.13 mb/d, 240 kb/d more than last month.

■ The US comprises the bulk of this growth at 1.11 mb/d with total production estimated at 18.28 mb/d in 2020.

■ Brazil’s production is expected to grow by 310 kb/d with a total production of 3.21 mb/d for 2020.

■ Norway’s production is expected to increase by 390 kb/d in 2020 largely due to the Johan Sverdrup field that already accounts for 20 percent of Norwegian output three months after first oil. Total production is expected to be 2.12 mb/d.


• OECD Supply

ο OPEC and the IEA forecast OECD growth at 1.83 mb/d with total supply reaching 31.74 mb/d and 30.29 mb/d respectively in 2020.

ο The IEA’s data also shows OECD Americas oil supply growth at 1.31 mb/d to reach 25.94 mb/d in total. OPEC reports larger growth of 1.49 mb/d growth with total oil supply reaching 27.18 mb/d in 2020. Growth within the region is led by the US at 1.43 mb/d to reach 19.81 mb/d in total according to OPEC, while the IEA projects less US growth of 1.11 mb/d to amount to 18.28 mb/d in total.

ο OPEC’s assessment for total OECD Europe production in 2020 is 4.00 mb/d with a growth of 0.27 mb/d after a decline from last year. The IEA’s assessment for OECD Europe supply records a higher increase by 0.44 mb/d for modestly lower total production of 3.77 mb/d.

• OPEC Supply

ο OPEC reports that total OPEC-14 preliminary crude oil production averaged 29.44 mb/d in December according to secondary sources. This is a decrease of 161 kb/d m-o-m (month-over-month). Crude oil output increased mostly in Angola while production decreased in Saudi Arabia, Iraq, and the UAE.

ο The IEA reports that OPEC production declined 180 kb/d m-o-m to also reach 29.44 mb/d mostly due to Saudi Arabia limiting production due to deeper OPEC + cuts that took effect in January. Angolan production increased following oil-field maintenance while Nigeria and the UAE posted declines.

3.3 STOCK DATA

See the graphs below for monthly estimates of OECD total commercial oil stocks and the monthly comparison versus the five-year average.*monthly estimates rounded to the nearest barrel.

• IEA data shows OECD commercial inventories decreased by 2.9 mb m-o-m in November to 2912 mb and are 8.9 mb above the five-year average after dipping below the average in October.

• According to OPEC, preliminary data for July showed that total OECD commercial oil stocks fell by 8.8 mb m-o-m to 2920 mb and are now 17.5 mb above the latest five-year average.

• While both organisations report closely aligned data on OECD stocks due to a continuous and reliable data stream and data harmonisation efforts, comprehensive data on stock developments for non-OECD countries is still work in progress.



IEA and OPEC data shows convergence on OECD stock drawsComprehensive non-OECD stock data remains missing

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Monthly estimates of OECD Total Commercial Oil Stocks from 2018-2020

IEA (OECD total commercial stocks)* OPEC (OECD total commercial stocks)


IEA and OPEC begin to diverge on stock balances over timeIEA stocks return above the five-year average

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MbOECD total commercial oil stocks relative to 5-year moving average*

OPEC (OECD total stocks vs 5-y avg) IEA (OECD total stocks vs 5-y avg)

five-year average = 0


3.3.1 GLOBAL STOCK ANALYSIS

IEA and JODI inventory data imply crude and product stocks drew by 9.2 mb in November

• IEA estimates OECD inventories fell 2.9 mb in November to 2,912 mb – 8.9 mb above the latest five-year average, but 0.6 days below the average in demand cover terms. Similarly, OPEC estimates OECD stocks fell by 8.8 mb in November to 2,920 – 17.5 mb above the latest five-year average, but 0.6 days below the average in days cover terms.

• JODI non-OECD* data for November imply crude stocks drew by 3.8 mb and product stocks built by 2.1 mb. The crude draws occurred primarily in Taiwan (-3.5 mb) and Iraq (-1.6 mb) while the product builds occurred in Taiwan (1.8 mb) and Algeria (1.2 mb). Together, IEA’s OECD and JODI’s non-OECD* inventory data imply global crude and product stocks drew by 9.2 mb in November.

• It is worth noting Chinese data for November was not included in the latest JODI update. However, IEA’s oil balance for China implies a massive 32.7 mb (1.1 mb/d) crude build in November as net crude imports climbed to a record high of >11 mb/d.

* Non-OECD data is the aggregate of country-level data through JODI. Not all non-OECD countries report inventory data and the countries in the aggregate may vary monthly depending on regularity of individual country reporting.

(mb) Crude Products Total Crude Products Total Crude Products Total Crude Products Total

OECD Commercial (IEA) 10.0 -12.9 -2.9 28.7 -58.7 -30.0 -50.4 56.2 5.8 36.3 29.3 65.7

OECD SPR (IEA) -5.1 0.5 -4.5 -1.6 -0.4 -2.0 -2.4 -1.9 -4.4 -10.7 7.8 -2.9

Available JODI Non-OECD Data* -3.8 2.1 -1.8 19.8 -7.3 12.5 -58.2 -11.5 -69.6 13.4 -19.3 -6.0

Total 1.1 -10.3 -9.2 47.0 -66.4 -19.4 -111.0 42.8 -68.2 39.0 17.8 56.8IEA's Implied Global Supply Surplus - - - - - - - - -76.4 - - 127.1

OPEC's Implied Global Supply Surplus - - - - - - - - -213.4 - - 25.2

November October 3Q19

Global Inventory Changes1H19

* Aggregate of all non-OECD data available through JODI. Not all non-OECD countries report inventory data and the countries in the aggregate may vary monthly depending on the regularity of individual country reporting.Source: IEA, JODI, OPEC, Rapidan Energy Group.


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* Aggregate of all non-OECD data available through JODI. Not all non-OECD countries report inventory data and the countries in the aggregate may vary monthly depending on the regularity of individual country reporting.Source: IEA, JODI, Rapidan Energy Group

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* Aggregate of all non-OECD data available through JODI. Not all non-OECD countries report inventory data and the countries in the aggregate may vary monthly depending on the regularity of individual country reporting.Source: IEA, JODI, Rapidan Energy Group

comparative analysis of monthly reports on the oil market€¦ · comparative analysis of monthly...

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