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EIA forecasts global liquids supply and consumption trends

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Supply and consumption

The EIA has forecast supply and consumption trends for 2015. The EIA expects global liquids supply to average 93.76 million barrels per day (or MMbbls/d) in 2015. This is 0.82 MMbbls/d higher than its estimate of 92.94 MMbbls/d in 2014. Global consumption is expected to average 93 MMbbls/d in 2015, up from an average consumption of 92.1 MMbbls/d in 2014.

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Non‐OPEC petroleum and other liquids supply

The EIA estimates that non-OPEC production grew by 2.1 MMbbls/d in 2014. This growth was led by the United States. In 2015, the EIA expects supply to grow much more slowly, by 0.8 MMbbls/d in both 2015 and 2016, due to lower oil prices. The slow growth is attributed mostly to slow production growth in the United States.

OPEC petroleum and other liquids supply

According to EIA estimates, OPEC crude oil production averaged 30.1 MMbbls/d in 2014. Noncrude oil liquids in 2014 averaged 6.4 MMbbls/d in 2014. The EIA expects OPEC crude production to decline by 0.1 MMbbls/d in 2015 and by 0.4 MMbbls/d in 2016. Noncrude liquids production is expected to increase by less than 0.1 MMbbls/d in both 2015 and 2016.

As for supply and consumption, global oil production is outpacing consumption, especially in the first half of 2015. Record crude inventory builds have created a greater need for demand-based signals to boost prices higher.

All the oil that’s being produced isn’t being met with a parallel increase in demand. This is depressing oil prices. This is bad news for oil producers such as Chevron Corporation (CVX), Marathon Oil (MRO), Apache Corporation (APA), and Occidental Petroleum (OXY). All these companies are part of the Energy Select Sector SPDR ETF (XLE) and make up ~20% of the ETF.

Read Market Realist’s Energy and Power page for the latest updates on the energy sector.

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