In its April Oil Market Report, the International Energy Agency said forecast 2009 global oil demand is revised down by 1.0 million barrels per day (bpd) after a reassessment of GDP assumptions and much lower than expected 1Q09 demand data. Global demand is now forecast at 83.4 million bpd, 2.4 million bpd below 2008. The pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010.
Benchmark crude prices exceeded $50/bbl for the first time in four months as more bullish sentiment entered financial markets in late March and early April. Prices recently have tracked expectations for the global economy, seeking signs of demand recovery. However, pervasively weak market fundamentals could limit further gains for now.
Lower global crude runs are expected to persist through 2Q09 and into 3Q09. Demand revisions, weak middle distillate cracks, and reports of bulging product inventories in several markets, suggest a further painful period of weak margins as refiners adjust operating rates to the 2.8 percent decline in demand now expected for this year.
OPEC cuts 2009 global demand estimate for eighth successive month
The Organization of Petroleum Exporting Countries cut its demand forecast for 2009 for the eighth consecutive month, citing a global recession that is slowing demand in the world’s biggest consuming economies.
The cartel revised its 2009 demand estimate to 84.18 million barrels per day, or 430,000 bpd lower than its previous estimate.
“Despite some positive signals in the U.S. and new aid packages in Japan and Germany, the world economy continued to contract. As a result, the global economic growth forecast for 2009 has been reduced by a further 0.6 percentage points to stand at minus 0.8 percent. The downward revisions have been made to all world regions except China and India, but primarily in the major OECD economies,” the cartel said.
Gasoline stock build in the U.S. and a weakening distillate market have exerted pressure on product market sentiment, undermining refining economics in the U.S. and Asia. Due to the continued slowdown in demand and comfortable product stocks as well as increasing spare refining capacity across the globe, the current bearish momentum of product markets is not expected to change in the coming driving season will not be enough to support for crude oil prices.
U.S. crude oil stocks moved above 360 million barrels, the highest level since early 1993. Total oil stocks in the EU-15 plus Norway increased for the fourth time in a row to stand at a 22-month high of 1,144 million barrels in March. Japan’s commercial oil stocks recovered sharply in February to stand at the upper end of the five-year range.
NPRA expresses concerns with EPA's proposed GHG endangerment finding
The National Petrochemical & Refiners Association has expressed significant concern with the U.S. Environmental Protection Agency’s proposed greenhouse gas endangerment finding.
“EPA’s announcement really comes as no surprise, but what is surprising is the willingness to proceed without having addressed all of the valid concerns previously raised by stakeholders and consumers,” NPRA President Charles T. Drevna said. “We have consistently held that when it comes to establishing procedures for addressing greenhouse gas emissions, it’s a matter of getting it right, not simply getting it done. EPA has not made the case.”
“Should the Obama Administration choose to regulate greenhouse gas emissions under the Clean Air Act, it would constitute EPA’s single largest and potentially most complex assertion of authority over the U.S. economy and Americans’ lifestyles. Such regulation would have an enormous impact on every facet of the economy, businesses large and small, as well as on the general population. Before moving forward with regulation, the United States must ensure that other major global contributors are similarly committed to reducing their ambient greenhouse gas concentrations. U.S. efforts would be for naught if the Administration fails to receive such commitments, and American economic competitiveness would be compromised.”
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