EIA estimates that crude oil and other liquids inventories grew by 2.0 million barrels per day (b/d) in the fourth quarter of 2016, driven by an increase in production and a significant, but seasonal, drop in consumption. Global production and consumption are both projected to increase through 2018, but consumption is expected to increase at a faster rate than production. As a result, global balances are expected to tighten.
The production increase in the fourth quarter of 2016 largely reflects members of the Organization of the Petroleum Exporting Countries (OPEC) ramping up production in advance of implementing the November agreement on production cuts. Global production is expected to have increased by 1.6 million b/d in the fourth quarter of 2016, with OPEC accounting for 0.9 million b/d, or 55%, of this increase. EIA estimates that total global production averaged 96.4 million b/d in 2016. Global production is expected to increase to 97.5 million b/d in 2017 and to 98.9 million b/d in 2018.
The large seasonal consumption declines in the fourth quarter of 2016 are not expected to continue as global consumption of petroleum and liquids is forecast to grow at a faster rate than production through 2018. Annual petroleum and liquids consumption for 2016 is estimated at 95.6 million b/d and is forecast to increase to 97.2 million b/d in 2017 and 98.7 million b/d in 2018. On a quarterly basis, consumption is expected to be greater than production in the third quarter of both 2017 and 2018, leading to stock draws in both periods.
Global inventories are expected to have increased an average of 0.9 million b/d in 2016. The January 2017 Short-Term Energy Outlook forecasts annual crude oil balances to tighten over the next two years, with 2017 averaging a 0.3 million b/d stock build and 2018 averaging a 0.1 million b/d stock build. By the second half of 2018, inventories are expected to decline by an average of 0.1 million b/d.
With annual inventory builds, along with a lack of a significant draw on existing inventories, prices remain below $60/b through the end of 2018. Brent crude oil spot prices are expected to remain fairly flat during 2017, in part as a result of the responsiveness of U.S. tight oil production to rising oil prices in late 2016, and they are expected to average $53/b for the year. EIA forecasts Brent prices will slowly increase in 2018, beginning the year at $54/b in January and ending the year at $59/b in December, averaging $56/b annually.
Principal contributor: Matthew French
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Tyre market in Bangladesh is forecasted to grow at over 9% until 2020 on the back of growth in automobile sales, advancements in public infrastructure, and development-seeking government policies.
The government has emphasized on the road infrastructure of the country, which has been instrumental in driving vehicle sales in the country.
The tyre market reached Tk 4,750 crore last year, up from about Tk 4,000 crore in 2017, according to market insiders.
The commercial vehicle tyre segment dominates this industry with around 80% of the market share. At least 1.5 lakh pieces of tyres in the segment were sold in 2018.
In the commercial vehicle tyre segment, the MRF's market share is 30%. Apollo controls 5% of the segment, Birla 10%, CEAT 3%, and Hankook 1%. The rest 51% is controlled by non-branded Chinese tyres.
However, Bangladesh mostly lacks in tyre manufacturing setups, which leads to tyre imports from other countries as the only feasible option to meet the demand. The company largely imports tyre from China, India, Indonesia, Thailand and Japan.
Automobile and tyre sales in Bangladesh are expected to grow with the rising in purchasing power of people as well as growing investments and joint ventures of foreign market players. The country might become the exporting destination for global tyre manufacturers.
Several global tyre giants have also expressed interest in making significant investments by setting up their manufacturing units in the country.
This reflects an opportunity for local companies to set up an indigenous manufacturing base in Bangladesh and also enables foreign players to set up their localized production facilities to capture a significant market.
It can be said that, the rise in automobile sales, improvement in public infrastructure, and growth in purchasing power to drive the tyre market over the next five years.
Headline crude prices for the week beginning 14 January 2019 – Brent: US$61/b; WTI: US$51/b
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