The OPEC Reference Basket finished down $9.49 at $75.57/b in November
Dec 11, 2014
The OPEC Reference Basket finished down $9.49 at $75.57/b in November, amid increasing supplies and sluggish global growth. ICE Brent fell $8.42 to $79.63/b, while Nymex WTI lost $8.53 to stand at $75.81/b. The Brent-WTI spread widened slightly to average $3.82/b in November.
World Economy
World economic growth for 2014 and 2015 remains unchanged from the previous month at 3.2% and 3.6% respectively. The OECD forecast has been maintained at 1.8% for 2014 and at 2.1% for 2015. Figures for both China and India remain unchanged from the previous report at 7.4% and 7.2% for China and 5.5% and 5.8% for India in 2014 and 2015, respectively.
World Oil Demand
World oil demand in 2014 is estimated to grow by 0.93 mb/d to average around 91.13 mb/d. These projections represent a decline of 0.12 mb/d from the previous report, mainly as a result of lower-than-expected consumption in the OECD region. For 2015, world oil demand is expected to increase by around 1.12 mb/d, some 70 tb/d lower than the estimation in the previous report, with total world oil demand expected to reach 92.26 mb/d.
World Oil Supply
Non-OPEC oil supply in 2014 is estimated to grow by 1.72 mb/d to average 55.95 mb/d. This represents an upward revision of 40 tb/d over the last report and is 0.58 mb/d higher than the initial forecast, of which 0.31 mb/d is due to an upward revision to the 2013 base-year figure. OECD Americas is expected to be the main driver for oil supply growth, followed by Latin America. In 2015, non-OPEC oil supply is forecast to increase by 1.36 mb/d to average 57.31 mb/d, representing an upward revision of 0.12 mb/d over the previous report. OPEC NGLs and non-conventional liquids are estimated to average 6.03 mb/d in 2015, up from 5.83 mb/d in 2014. In November, OPEC crude oil production averaged 30.05 mb/d, according to secondary sources, a drop of 0.39 mb/d over the previous month.
Product Markets and Refining Operations
Product markets showed a mixed performance in the Atlantic Basin in November. European margins were supported by middle distillates cracks. In contrast, US refinery margins fell as gasoline crack spreads declining sharply due to expectations of lower seasonal demand and rising US gasoline stocks. The Asian market showed a sharp recovery in November on support from seasonal winter demand, along with the positive performance seen at the top and bottom of the barrel.
Tanker Market
The tanker market experienced positive sentiment across its various classes in November. Freight rates in both dirty and clean tankers showed an improvement over the previous month, supported by increased tonnage demand from West of Suez, driven by winter requirements, as well as limited availability and weather delays.
Stock Movements
OECD commercial oil stocks fell in October by 5.1 mb to stand at 2,716 mb. At this level, inventories were around 15 mb higher than the five-year average. Crude stocks saw a surplus of 52 mb, while products remained 37 mb below the five-year average. In terms of days of forward cover, OECD commercial stocks stood at 59.0 days, around 0.9 higher than the five-year average.
Balance of Supply and Demand
Demand for OPEC crude is estimated at 29.4 mb/d in 2014. In 2015, required OPEC crude is forecast at 28.9 mb/d.
Source: OPEC
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