GLOBAL OIL SUPPLIES
Global crude oil supplies fell month-on-month in March by a steep 1.2 million b/d to 91.75 million b/d, with a decline in output from members of the Organization of the Petroleum Exporting Countries accounting for near 75% of the loss, according to the International Energy Agency's most recent Oil Market Report.
Due to sharply lower supplies from Iraq, Saudi Arabia, and Libya, OPEC crude oil supplies in March fell 890,000 b/d to just 29.62 million b/d—the lowest level in 5 months.
"Libyan and Iraqi outputs were down on worsening civil unrest and operational issues, respectively, while Saudi Arabia curbed supplies last month in the wake of weaker demand from refiners during the peak spring refinery turnaround period," IEA said.
OPEC's "effective" spare capacity in March was estimated at 3.53 million b/d, up from 3.31 million b/d in February. Following an upward revision to demand and reduced forecast for non-OPEC supplies, the "call on OPEC crude and stock change" for the second quarter was raised by 100,000 b/d to 29.4 million b/d and for the second half by 350,000 b/d to an average 30.6 million b/d.
For all of 2014, the non-OPEC supply forecast has been revised lower by 250,000 b/d compared with last month's report due to downward adjustments to the forecast for countries of the former Soviet Union, and to a lesser extent to smaller changes to Europe and Latin America output.
Output from both Russia and Kazakhstan is projected to fall in 2014 because of accelerated declines at Russia's legacy fields and ongoing (and extensive) repairs on Kashagan field's leaky pipeline system.
The forecast of global demand growth has been marginally trimmed to 1.3 million b/d in 2014 vs. 1.4 million b/d in last month's report, reflecting lower Russian demand projection in the wake of its annexation of Crimea.
The adjustment is in line with underlying downward revisions to Russian gross domestic product by the World Bank and the International Monetary Fund, IEA said. The World Bank cut by half its base-case projection for Russian economic growth in 2014—to 1.1% from its December estimate of 2.2%. The bank noted that, in a "high-risk" scenario for Russia, "An intensification of political tension could lead to heightened uncertainties around economic sanctions which would further depress confidence and investment activities."
The forecast of US oil demand growth for 2014 has been trimmed marginally by 20,000 b/d from last month's report, to 19 million b/d, following lower-than-expected delivery data for January and February.
IEA's demand forecast for China is maintained at 10.4 million b/d for 2014, 3.4% up on the year earlier, in the prospect of renewed government support for the slowing down Chinese economy.
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