Oil Market Supply Imbalance Getting Worse, Not Better
Oil futures prices (WTI) plunged 12.5 percent this week from $47.90 on Friday, November 3 to $41.96 yesterday morning, November 11. The main reason is that the global supply imbalance is getting worse.
The U.S. Energy Information Administration’s (EIA) latest report indicates that the world supply surplus (production minus consumption) increased 590,000 barrels per day (bpd) compared to September to 1.58 million bpd (Figure 1).
Figure 1. World liquids production, consumption and relative surplus or deficit.
Source: EIA and Labyrinth Consulting Services, Inc.
(click image to enlarge)
Supply was flat but consumption decreased 520,000 bpd. Weaker consumption suggests weakening demand, a disturbing trend that is also evident in year-over-year consumption-change data (Figure 2).
Related: OPEC Hoping Chinese, Indian Demand Can Alleviate Glut
Figure 2. World year-over-year liquids consumption change.
Source: EIA and Labyrinth Consulting Services, Inc.
(click image to enlarge)
Only OPEC estimates global oil demand. Their Monthly Oil Market Reportreleased today shows world oil demand growth of 1.6 million bpd so far in 2015 (Figure 3) but decreasing to 1.5 million bpd overall for the year and only 1.25 million bpd for 2016. OPEC data indicates about 1 million barrels of surplus supply relative to demand.
Related: A Bit Of Good News For The Global Coal Industry At Last
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