It seems that OPEC and the International Energy Agency live in different worlds when it comes to projecting future energy demand. While OPEC in their monthly report expects to see a larger oil supply deficit in 2018, the International Energy Agency (IEA) sees the appetite and an oil market oversupplied in the first half of 2018.
The International Energy Agency’s forecast on demand have been abysmal and now once again they are low balling demand at least compared to OPEC which says that said oil use would grow faster than previously thought due to a stronger-than-expected world economy. OPEC says that “The global economic growth dynamic has continued its broad-based and relatively strong momentum,” OPEC said. “The ongoing momentum could still provide some slight upside potential.”
The International Energy Agency on the other hand is saying that global oil demand growth is likely to increase more slowly over the coming months, doubling down on their previous underestimation demand, because of their prediction that warmer temperatures will cut consumption, which may tilt the market back into surplus in the first half of next year. They then put in a downward revision for oil growth down by 0.1 mb/d for both 2017 and 2018. Yet they had to admit that they now see increases of 1.5 mb/d in 2017 (or 1.6%), to 97.7 mb/d, and 1.3 mb/d in 2018 (or 1.3%) to 98.9 mb/d, so in other words their previous demand forecasts were wrong,
On the other hand OPEC demand for their oil is up to 33.42 million barrels per day (bpd) of OPEC crude next year, an increase of 360,000 bpd from its previous forecast and the fourth consecutive monthly increase in the projection from its first estimate made in July. OPEC also says in contrast to the IEA that demand will rise by 1.51 million bpd next year, up 130,000 bpd from previously, to 98.45 million bpd. They put world economic growth at 3.7%, up from 3.5% in their last report.
OPEC also says that OPEC said inventories in developed economies declined by 23.6 million barrels in September to 2.985 billion barrels, to just 154 million barrels above the five-year average. OPEC says that the excess in the oil market overhang has fallen considerably and they are on target with their cuts.