Credit: Short-term crude outlook from the EIA
For 2017, they see an additional 210kbpd of demand, with demand up 1.54 mbpd y/y. The EIA says upward revisions in Chinese and Indian demand are responsible for the forecast change.
"Many of the same drivers that prompted revisions to 2015 demand growth rates are expected to continue affecting demand in the forecast period," the report says. "China's consumption is forecast to grow by 0.4 million b/d in both 2016 and 2017. EIA expects that China's demand for HGL will continue to grow at a fairly steady pace as additional PDH plants come online, including Oriental Energy's plant in Zhejiang and Haiwei's plant in Hebei. Gasoline and jet fuel consumption is also expected to grow in 2016. Similarly, EIA expects continued strength in India's consumption growth through the forecast period, particularly transportation fuel consumption, which is expected to drive year-on-year increases of 0.3 million b/d in both 2016 and 2017."
That's bullish for crude, at the margins.
More:
- US production is forecast to average 8.6 million b/d in 2016 and 8.2 million b/d in 2017, the 2017 forecast is 0.1 mbpd higher than in April.
- They say April production was 9.0 mbpd vs 9.7 mbpd last April
- Global oil inventory builds are expected to continue through the first half of 2017, but at a generally decreasing rate.
Outside of US production, they don't see much of a run-off in expected supplies due to low prices.
"Petroleum and other liquids production, with the exception of U.S. tight oil plays, is relatively robust through 2017 because of investments that were committed to projects when oil prices were higher. Although oil companies have reduced investments, most of the cuts have been to capital budgets that largely affect production levels beyond 2017," the EIA writes.
"EIA estimates that OECD commercial crude oil and other liquid fuels inventories were 3.00 billion barrels at the end of 2015, equivalent to roughly 66 days of consumption. Forecast OECD inventories rise to 3.11 billion barrels at the end of 2016 and are expected to be at the same level at the end of 2017."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
