Oil Demand Growth Rises in 2015

Faltering global growth is not the problem confronting the oil market. The latest OPEC monthly report (published on Tuesday) shows the oil cartel has upped its estimate for 2015 demand to 1.38 mb/d. The International Energy Agency’s monthly update released on Wednesday has pushed its 2015 forecast up to 1.6 mb/d. The average annual growth during 2011-2014 was 1.00 mb/d. OPEC and IEA are forecasting further demand increases of 1.3-1.4 mb/d in 2016. OPEC expects non-OPEC supplies to rise by 0.96 mb/d this year and 0.27 mb/d in 2016. The pressure that had been placed on the global market by the rise in U.S. production seems to be easing. The IEA is estimating supply growth falling from 2.4 mb/d in 2014 to 1.1 mb/d in 2015 and contracting slightly in 2016. This does not take full account of future Iranian production rates once sanctions are removed. The market is adjusting but stocks are likely to keep building through much of 2016 with storage being the limiting factor.