February Sets Stage for Supply Deficit in Q1

摘要

The first quarter is moving into a supply deficit on steep Opec production cuts and unexpected strong OECD demand,a reversal of the fourth quarter when Opec was flooding the market to offset the production fallout of US sanctions against Iran and when OECD demand was weak,especially in Europe and Asia,which resulted in large downward revisions.After a balanced January,with upward revisions,February is showing a 600,000 barrel per day supply deficit(OMI Feb.1519).Strong February demand growth in the US is more than offsetting demand drops in Europe and Asia(p5).US oil production growth is stagnating(p3).Although up just 20,000 b/d on the month,US production is still dominating market balances and up by 1.94 million b/d on the year(OMI Oct.1918).US output is expected to continue moving sideways at 12.1 million b/d through April before slowly picking up pace.Looking forward,announced additional cuts from Saudi Arabia are expected to keep supply deficits in place throughout the year.Opec will have little choice but to continue the supply cuts into the second half of 2019(p4).