The International Energy Agency this morning released its April report on the global oil market. The short version of the story is that global consumption of oil is expected to rise to an average of 90 million barrels/day in 2012. Global supply should rise to 91 million barrels/day.
OPEC supply for 2012 is estimated to at 38.1 million barrels/day, which includes natural gas liquids and condensates as well as conventional crude. Non-OPEC supply is expected to rise to an average of 53.3 million barrels/day. The boost in non-OPEC supply virtually all comes from North America, where production is expected to rise by 600,000 barrels/day this year.
The IEA also noted the rise in global inventories. At the end of March inventories stood 2.65 billion barrels, above the five-year average for the first time in a year. The March inventory level grew by 13.5 million barrels, and inventories are expected to rise by another 5.1 million barrels in April.
Declining demand in the developed countries continues to be offset by growing demand in the developing nations. The recent drop in crude prices is mostly a function of weak economic data from the US and Europe, but the demand-supply balance is also playing a part. Reduced tension between Iran and the US has also helped lower prices.
Price pressure on crude will continue today. Brent crude on the ICE is down -0.78% at $111.88, and WTI crude on the ICE is also down, by -1.1% at $96.02.