Oil Market Report

Oil Market Report 11 December 2008

Global oil demand is now expected to contract in 2008 for the first time since 1983, shrinking by 0.2 mb/d, with the total this year revised down by 350 kb/d to 85.8 mb/d. 2009 demand will grow again to a downward‐adjusted 86.3 mb/d. This forecast is based on the IMF assumption that the global economy will gradually recover from 2H09.

World oil supply growth slowed to 165 kb/d in November, averaging 86.5 mb/d, with OPEC crude supply curbed by 760 kb/d to 31.3 mb/d on weakening demand. December supplies will likely be reduced further and OPEC Ministers meet on 17 December to mull further target cuts. The ‘call on OPEC crude and stock change’ for 2009 averages 30.7 mb/d, around 0.8 mb/d below 2008.


Non‐OPEC output now averages 49.6 mb/d for 2008 and 50.1 mb/d for 2009, representing annualised changes of ‐85 kb/d and +480 kb/d respectively. But lower estimates are incorporated for 2009 Europe and the FSU (‐0.2 mb/d), while the OPEC NGL forecast is also trimmed by 0.3 mb/d.

Crude oil prices dropped to nearly $40/bbl in early December, amid continued signs of economic slowdown and OECD demand decline. Weak refining margins are causing economic run cuts and in turn a crude overhang, as seen in growing stocks and a widening contango.

Global 4Q08 refinery crude throughput should average 72.6 mb/d, 0.8 mb/d lower than in last month’s report, due to weaker demand and the poor margin outlook, particularly on the US Gulf Coast. Global 1Q09 crude runs are forecast to average 73.5 mb/d, a dip of 0.4 mb/d against 1Q08, driven by a 0.7 mb/d year‐on‐year decline in the OECD.

OECD industry stocks rose by 45.6 mb to 2,697 mb in October, on weak demand and post‐hurricane recovery in the US. Downward revisions to OECD demand increased end‐October forward demand cover to 56.8 days, well above the five‐year average. Preliminary November data point to another OECD stock build of 10.3 mb.


International Energy Agency

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