December Oil Market Report… IEA

Here are highlights from the IEA’s monthly Oil Market Report (my bold):

• Global oil demand increased by 900 kb/d y-o-y in 3Q19, the strongest annual growth in a year. Nearly three-quarters of the growth occurred in China. Indian demand rose 135 kb/d, but OECD deliveries fell for the fourth straight quarter and are expected to decline 75 kb/d overall in 2019. For 2019 and 2020 we have left unchanged our global oil demand growth forecasts at 1 mb/d and 1.2 mb/d, respectively.
• Faced with potential oversupply in early 2020, OPEC+ countries agreed to deepen existing cuts to 2.1 mb/d in 1Q20. This implies a reduction in supply of 500 kb/d from current levels. Despite the additional curbs and a reduction in our forecast of 2020 non-OPEC supply growth to 2.1 mb/d, global oil inventories could build by 0.7 mb/d in 1Q20. In November, global oil supplies held steady at 101.36 mb/d, down 1.2 mb/d y-o-y.
• The sharp drop in refining margins in November in all markets revealed the delicate balancing act between global crude oil and product markets. Labour strikes in November in several countries were factors in the downward revision to our 4Q19 throughput forecast, now expected to be flat y-o-y. In 2020, refining throughput growth is also revised down to 1 mb/d, after a 0.2 mb/d decline in 2019.
• OECD commercial stocks drew 32.5 mb in October to 2 904 mb. They were 2.9 mb below the five-year average and covered 60.6 days, one day below the average. Preliminary data for November showed total inventories falling in all regions, by 23.5 mb. Short-term floating storage of crude oil fell 2.1 mb in November to 62 mb. The number of Iranian VLCCs used for floating storage decreased by one to 26.
• ICE Brent futures rose above $64/bbl following the OPEC+ meetings. Physical markets appear to have tightened with steeper backwardation for both North Sea Dated and Dubai, and rising differentials for many crudes, particularly sweet grades. Product cracks eased, with the exception of naphtha which was boosted by petrochemical demand. HSFO cracks continued to be pressured by the IMO regulations and fell to record lows.

And, this:

”In this Report we have reduced our forecast for non-OPEC production growth next year from 2.3 mb/d to 2.1 mb/d to take account of lower output from participants in the OPEC+ deal and a weaker growth outlook for Brazil, Ghana and the United States. Even so, with our demand outlook unchanged, there could still be a surplus of 0.7 mb/d in the market in 1Q20.“