IEA warns of looming uncertainties

The global oil market has cooled recently but "considerable uncertainties" mean this situation may not last, the IEA said. The Paris-based energy watchdog's latest Oil Market Report (OMR) made few changes to its supply and demand outlooks.

The IEA said concerns about stability of oil supply have eased since June when Opec and non-Opec countries, notably Saudi Arabia and Russia, agreed to increase production and US exports hit a record level. Demand growth has slowed in the second and third quarters of this year, partly because of comparisons with higher year-earlier demand levels and prices.

But "the recent cooling down of the market, with short term supply tensions easing, currently lower prices, and lower demand growth might not last", it said. Looming sanctions on Iran could tighten supply and trade tensions could cool demand. The market outlook in next month's OMR "could be far less calm".

The IEA kept its global demand growth forecast for this year at 1.4mn b/d, and revised its forecast up by 110,000 b/d to 1.5mn b/d for 2019, when it sees a particularly strong second quarter. Overall demand is pegged at 99.2mn b/d this year and 100.7mn b/d for 2019.

Global oil supply looks healthy, the IEA said. Strong non-Opec production growth, led by Russia, and an increase in output from countries party to the Opec and non-Opec agreement combined to push overall supply higher by 300,000 b/d to 99.4mn b/d in July from June. Russian output neared a record and could reach 11.28mn b/d next year.

It forecast US crude production growth at 1.2mn b/d for 2018 and 1mn b/d in 2019 as "infrastructure bottlenecks put a cap on gains."

The IEA said Opec production in July was unchanged from June at 32.18mn b/d, with Saudi Arabia's output at 10.35mn b/d. Argus assessed Opec output for July at 32.23mn b/d.

The call on Opec crude is 32.3mn b/d this year and 31.9mn b/d in 2019, both slightly higher than previously. Opec spare capacity was 3.16mn b/d based on July output, the IEA said. Commercial inventories in developed countries fell in July, and remain below the five-year average, mostly because of record high refinery throughput and crude exports in North America.

Opec releases its Monthly Oil Market Report (MOMR) on 13 August.