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Wednesday, November 21, 2018

IEA report January

The fall in stocks in November and the increase in OPEC production in December partly explain the extremely strong tanker market in that period.


At the same time as the availability of VLCCs was at half its normal level - partly due to slow steaming - the number of VLCC fixtures heading eastwards, according to Clarksons, was 108 in November, which is the highest we have recorded. The average since 2002 has been 62 and the previous high was 103 in October 2004 when Saudi Arabia gave discount prices, causing frenetic trading.


World oil supply only increased by 1.13 million barrels per day (mbd) in 2007, according to the International Energy Agency (IEA). OPEC reduced production by 0.39 mbd, whereas non-OPEC production increased by 0.52 mbd, and stocks/misc. were reduced by 0.3 mbd. These figures reflect that there are some 'missing barrels' in the system. 


Whereas OECD oil demand was reduced by 0.1 mbd in 2007, it is projected to increase by 0.52 mbd in 2008, 0.12 in N America, 0.2 mbd in OECD Asia and 0.2 mbd in Europe. The biggest demand increases are non-OECD and are expected in China (0.44 mbd) and the Middle East (0.39 mbd).




On the supply side, the Former Soviet Union (FSU) is expected to continue to increase oil production by 0.47 mbd. Oil demand in this region is expected to increase by 0.12 mbd, which means it will have 0.35 mbd for export.


In 2007 oil exports increased from the BTC (BakuTblisi/Ceyhan) pipeline to Ceyhan on the Mediterranean and from the Artic/Far East (Sakhalin).


According to the IEA, Russian export duties rose again on 1 December 2007, but while exports remained flat from the Black Sea, Primorsk loadings were scheduled to rebound after pipeline maintenance, suggesting a modest net increase in December exports overall. January, however, may see an offsetting drop of around 50 kb/d, as potentially higher Baltic flows - due to the introduction of new, larger Baltimax tankers - are overshadowed by disrupted exports from Gdansk, underpinned by a pipeline contractual dispute. The supply forecast for Azerbaijan in 2008 has been revised up by 20 kb/d to 1.09 mb/d, sustaining the 200 kb/d growth seen in 2006 and 2007.




OECD industry stocks at the end of the year were below their nominal five-year average and at the bottom of their five-year range in terms of forward demand cover, at 51.1 days, reflecting tighter market fundamentals. While crude stocks fell 17.9 mb, product levels were down by 20.9 mb, slipping below their five-year range, as refinery maintenance prevented throughputs from meeting seasonally strong demand.


OPEC may be interested in keeping stocks at a low level, thereby maintaining a form of price control on the market The low stocks do, however, represent a potential for the tanker markets. If stocks remain at such a low level, there will probably continue to be strong volatility in the tanker markets.


See also Tanker News on INTERTANKO's  web site.