Crude futures regained early-2011 highs in March, underpinned by concern over current and potential supply disruptions. However, amid rising actual 1Q12 OPEC production, and a sizeable implied build in global stocks, prices have subsequently eased. Brent futures were last trading near $120/bbl, with WTI at $102/bbl.

Global oil demand is expected to rise to 89.9 mb/d in 2012, a gain of 0.8 mb/d (0.9%) on 2011, largely unchanged from last month. Consumption reaches a 2Q12 low of 88.6 mb/d, as weak seasonal products demand combines with high prices and a stuttering economic recovery. Demand then strengthens through end-2012 as economic growth accelerates.

Non-OPEC supply fell by 0.5 mb/d in March to 52.7 mb/d. Decline was widespread, but notable in the UK and at synthetic crude plants in Canada.Unplanned outages reached 1.1 mb/d in 1Q12, restraining non-OPEC output to 53.2 mb/d, albeit 0.5 mb/d higher than 1Q11. Non-OPEC growth recovers through 2012 to average 0.7 mb/d, taking total output to 53.4 mb/d.

March OPEC supply held near three-and-a-half year highs, up by 135 kb/d to 31.43 mb/d. A list of countries pledging import cuts in coming months suggests Iranian supplies could fall by 0.8-1.0 mb/d versus 2011 levels by mid-summer. The ‘call on OPEC crude and stock change’ for 2012 remains at 30.1 mb/d, but is raised for 2Q12 and 3Q12 to 29.5 mb/d and 30.7 mb/d respectively.

Global refinery crude runs for 1Q12 have been revised down by 90 kb/d, to 74.8 mb/d. Seasonal maintenance, notably in OECD Pacific, trims global throughputs by 410 kb/d in 2Q12, to 74.4 mb/d. Seasonally higher US runs, and new non-OECD capacity, provide an offset, leaving 2Q12 runs 0.5 mb/d above year-ago, compared to a y-o-y gain of 120 kb/d in 1Q12.

OECD industry total oil inventories fell by 12.4 mb in February, to 2 630 mb, compared with a historical average 38.8 mb draw. The stock deficit vs. the five-year average narrowed to 13.9 mb, from 40.4 mb in January. Forward demand cover rose 1.2 days to 59.6 days. March preliminary data show a 22.6 mb increase in OECD industry inventories.