Two weeks after Opec ministers decided to leave strategy unchanged and continue pumping at will, the organisation's Monthly Oil Market Report (MOMR) has left all its key metrics unchanged and announced only lukewarm hopes for the market rebalancing in the second half.
The MOMR sees global demand growth at 1.2mn b/d in the second half of the year, on a par with the first half, while second-half non-Opec production is expected to fall by a modest 140,000 b/d compared with the first half.
Demand growth in the OECD will be a positive 200,000 b/d, with North America rising by 300,000 b/d, Europe flat, and Asia in decline. But the report makes clear that actual OECD second-half demand will be determined by retail price movements during the driving season and then heating oil demand as colder weather approaches.
Non-OECD demand growth of 1mn b/d will continue to be led by India.
Non-Opec supply output in the second half is seen at 1mn b/d below the same period in 2015. Developing country output is put 270,000 b/d up on the first half. Russian production is expected to slip after a strong first half. US output is seen dropping by 150,000 b/d in the second half.
Overall, the MOMR concludes "the excess supply in the market is likely to ease over the coming quarters" and "provided that there is a clearer picture regarding oil supply and demand, the expected improvement in global economic conditions should result in a more balanced oil market toward the end of the year."
For the full year, Opec leaves forecast demand growth at 1.2mn b/d to average 94.18mn b/d. Non-Opec production contraction is left at 740,000 b/d. And call on Opec crude is left unchanged at 31.5mn b/d.
The second-half call on Opec is forecast at 32.6mn b/d. In their submissions to the secretariat, member countries — excluding Libya which has not reported for some months, and Indonesia, and newly-readmitted Gabon — declare a total May production of some 33.1mn b/d, more than 250,000 b/d above the April figure. The major contributory factor is an increase of 280,000 b/d from the UAE as field maintenance ended. Iran declares an increase of 100,000 b/d. Saudi Arabia and Iraq are little changed. Nigeria says its May production only fell 64,500 b/d month on month, despite a series of supply disruptions.
