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As on: May 23, 2019 03:00 AM
Market Speaks: IEA Cuts Global Oil Demand Estimates, Sees Considerable Uncertainty On Supply Side
16-May-19   13:43 Hrs IST
The International Energy Agency (IEA), in its latest monthly update, cut global oil demand estimate by 90 kb/d to1.3 mb/d. The reduction is mainly concentrated in 1Q19 on weaker than expected data for Brazil, China, Japan, Korea, Nigeria, and elsewhere lowering growth by 410 kb/d versus our last Report. Even so, slower demand growth is likely to be short-lived, as IEA believes that the pace will pick up during the rest of the year. An important implication of revised demand data is that in 1Q19 the oil market saw an implied surplus of supply over demand of 0.7 mb/d, which was higher than previously suggested. The agency notes that as we move through 2Q19, while there is considerable uncertainty on the supply side, it is highly likely that the implied balance will flip into an indicative deficit of about the same size. Stocks in the OECD at the start of April have fallen back to the level seen in July in terms of days of forward cover and other stock indicators are pointing in the same direction.

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