• Since our last Quarterly Oil Market Update in June 2014, global crude oil prices have fallen sharply amid ample supply and weak demand combined with an increasing confidence that turmoil in Iraq is unlikely to disrupt supplies.
• Global supply stood at 91.96 million barrels in August, up 2.1% from the same time in 2013. Growth has been led by increased non-OPEC production, in particular from non-conventional sources in the United States, while OPEC supply has been pushed higher by Libyan production coming back online.
• In contrast to ample supplies, liquid fuel demand has been subdued for the last several months, reflected in higher inventories and lower refinery runs. Slowing economic growth in China, coupled with weakness in Japan and ongoing malaise in much of Europe have pushed expectations of demand lower, despite some optimism returning to the US, UK and India.
• Reflecting these fundamentals, market expectations of oil prices have fallen sharply since June as ample supply and weak demand continue to outweigh concerns over geopolitical tensions in the Middle East.
• We have cut our forecasts for crude oil prices accordingly over the medium term. We expect that that Brent will average US$103/barrel in 2015. Our forecasts for Australian retail fuel prices show underlying growth in line with a lower trending Australian dollar. We expect unleaded to reach 151.1 AUc/litre in the March quarter 2015, climbing to 155.2 AUc/litre by the December quarter 2015.

For further analysis download the full report.

• Oil Market Update – September 2014 (PDF, 977KB)