Global oil demand growth in 2017 stronger than expected: IEA

Global oil demand this year is growing at a stronger-than-expected rate, particularly in Europe and the US, the International Energy Agency (IEA) said in its latest oil market report, revising upwards its growth estimate to 1.6 million barrels per day (bpd).

In August, IEA projections had held a demand growth of 1.5 million bpd for 2017.

In second quarter this year, oil demand grew by 2.3 million bpd, or 2.4 percent, the agency said, driving IEA to revise its estimates for the year.

The agency, however, warned that the hurricanes Harvey and Irma are projected to slow US oil demand growth in Q3 2017.

Global oil supply, meanwhile, fell by 720,000 bpd in August due to unplanned outages and scheduled maintenance, mainly in non-OPEC countries. This was the first decline in four months, cutting supply to 97.7 million bpd.

On a year-on-year basis, production was up 1.2 million bpd as non-OPEC continued to show substantial growth, the agency said.

The 10 non-OPEC countries that are participating in OPEC’s production cuts deal achieved more than 100 percent compliance for the first time since the agreement came into effective in January this year.

Also, OPEC crude output fell in August for the first time in five months, decreasing by 210,000 bpd from a 2017 high to 32.67 million bpd. The 12 members in the supply pact raised their compliance rate to 82 percent from 75 percent in July.

For the year as whole OPEC’s compliance rate is 86 percent, IEA said.

Commercial stocks in Organization for Economic Co-operation and Development (OECD) nations were unchanged in July versus June, when they normally tend to increase.

“Within the OECD total, product stocks are now only 35 million barrels above the five-year average,” the Paris-based agency said. “Depending on the pace of recovery for the US refining industry post-Harvey, very soon OECD product stocks could fall to, or even below, the five-year level.”

IEA said that based on recent bets made by investors, expectations are that oil markets are tightening and that prices will rise, although very modestly.

On Wednesday, Brent crude was last trading up 0.6 percent at $54.62 per barrel, while WTI crude was higher by nearly 1 percent at $48.69 a barrel.