In its monthly Oil Market Report for May released Wednesday morning, the International Energy Agency (IEA) said that global crude supplies held steady in April at roughly 98 million barrels per day. Growth in non-OPEC production offset production declines from OPEC members.
The IEA expects 2018 supply growth from non-OPEC countries to rise by 1.87 million barrels a day, up by about 70,000 and more than double the 700,000 barrel-a-day growth in 2017. As both the U.S. Energy Information Administration (EIA) and OPEC have already projected, the IEA also expects U.S. production to surpass 10 million barrels a day this year.
Along with the rise in non-OPEC production, the agency sees demand growth of 1.4 million barrels a day, down by 100,000 barrels from last month’s report. The IEA attributes the decline to higher prices that are expected to dampen demand.
OPEC crude oil production in April decreased by 130,000 barrels a day to 31.65 million barrels, largely due to further deterioration in Venezuelan production and lower output from Africa. The call on OPEC crude and stockpiles will average around 32.25 million barrels a day for the remainder of 2018, about 600,000 higher than April output.
Commercial stockpiles in the OECD countries declined in March by 26.8 million barrels to stand at 2.82 billion, about a million barrels lower than the five-year average and 214 million below the March 2017 level. OECD stockpiles have reached their lowest level since March of 2015.
The IEA noted that Iranian oil exports currently total about 2.4 million barrels a day. The withdrawal of the United States from the Iran nuclear deal and subsequent imposition of new sanctions could remove as much as 1.2 million barrels from that daily total. Here’s how the IEA sums it up:
For now, the rapidly changing geopolitical landscape will move the attention away from stocks as producers and consumers consider how to limit volatility in the oil market. For its part, the IEA will monitor developments closely and is ready to act if necessary to ensure that markets remain well supplied.
Early Wednesday morning, West Texas Intermediate crude for June delivery traded at $71.26 a barrel, down just five cents compared with Tuesday’s closing price of $71.31. Brent crude for July delivery traded down about 0.5% at $78.02 a barrel in London.