OIL: DOWNSIDE RISK PRODUCTION
In April, continued tensions between Russia and Ukraine, supply outages in Libya and northern Iraq, and increased crude buying as refiners come out of maintenance turnarounds combined to offset the impact of seasonally weaker demand and pushed up oil prices marginally, the International Energy Agency said in its most recent Oil Market Report.
In this month's report, IEA forecast worldwide oil demand to average 92.8 million b/d in 2014, 65,000 b/d higher than projected in last month's report. The revision was based on raised historical non-OECD (Organization for Economic Cooperation and Development) demand and higher estimates for OECD deliveries across this year's first quarter, partially offset by the International Monetary Fund's curbed macroeconomic outlook.
In the latest quarterly World Economic Outlook published in April, IMF expects the global economy to grow by 3.6% in 2014, up from 3% in 2013 but below 3.7% assumed in January's WEO.
IEA's assessment this year's first-quarter global demand has been raised by 190,000 b/d to 91.3 million b/d, reflecting mostly stronger-than-expected demand in the US in February and other upward revisions for Japan, Germany, and the UK.
After reaching 5-month lows in March, crude oil supply from countries of the Organization of the Petroleum Exporting Countries flirted near the 30 million b/d mark again in April, led by higher output from Iraq, Saudi Arabia, Kuwait, and Algeria.
Overall non-OPEC production is now expected to increase by about 1.5 million b/d for 2014 as a whole, roughly 100,000 b/d below last month's forecast and 400,000 b/d lower than projected last October. Downside risk is present for non-OPEC production forecast, principally due to continued political, technical, and operational issues, IEA noted in the report.
"South Sudan and Colombia saw their 2014 outlook downgraded due to civil conflict, pipeline attacks, and issues with local communities. Kazakhstan and Canada also saw reduced output forecasts as technical problems and heavier-than-expected maintenance took their toll on supply," IEA said.
OECD industry inventories slipped by 2.5 million bbl in March to 2.57 billion bbl, broadly in line with seasonal trends. The deficit of inventories vs. 5-year average levels remained at a wide 110 million bbl. Refined products accounted for 98 million bbl of the deficit while crude stood at a 7 million bbl shortfall.
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IEA - For the third consecutive year, global energy investment declined, to USD 1.8 trillion (United States dollars) in 2017 – a fall of 2% in real terms. The power generation sector accounted for most of this decline, due to fewer additions of coal, hydro and nuclear power capacity, which more than offset increased investment in solar photovoltaics.
EIA - Crude oil production from the major US onshore regions is forecast to increase 143,000 b/d month-over-month in July from 7,327 to 7,470 thousand barrels/day , gas production to increase 1,066 million cubic feet/day from 69,466 to 70,532 million cubic feet/day .
U.S. FRB - Industrial production rose 0.6 percent in June after declining 0.5 percent in May. For the second quarter as a whole, industrial production advanced at an annual rate of 6.0 percent, its third consecutive quarterly increase. Manufacturing output moved up 0.8 percent in June.
U.S. DT - The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $69.9 billion. Of this, net foreign private inflows were $58.8 billion, and net foreign official inflows were $11.1 billion.