OPEC MONTHLY OIL REPORT
Crude Oil Price Movements:
OPEC reported that the OPEC reference basket averaged $55.50/b in October, gaining $2.06 over the previous month and reached remarkable level after June, 2015. Oil prices were near two year’s high and was set for its first back to back monthly gain since last year. New york futures recorded a jump of 4.9% this month that would be the best October since 2011. Oil prices took the support from the indications of extention of production cut agreement beyond March, 2018 and growth in demand forecast. ICE Brent ended $2.13 higher at $57.65/b while Nymex WTI increased $1.72, reaching $51.59/b, keeping the Brent-WTI spread above $6/b. Hedge funds increased their net long positions in Nymex WTI and ICE Brent futrures and options. Brent and Dubai remained in backwardation, while the WTI contango eased. Sweet/sour differentials narrowed in Asia and Europe, but widened on the U.S Gulf Coast.
OPEC sees that the global economic growth continued its momentum, particularly in OECD countries. The GDP growth forecast is lifted to 3.7% in 2017 and in 2018. The ongoing strong growth dynamic in the Euro-zone and the potential tax cut in U.S made it possible to uptick in the OECD GDP growth rate. China’s growth was better than expected in 2017 and consequently revised up to 6.8% for 2017 and to 6.5% in 2018. India’s growth rate is expected to reach 7.4%, after this year’s growth of 6.8% despite of adverse effects of its recent reforms that were implemented in the past months. Brazil and Russia are expected to continue recovery in 2018. Brazil’s growth has been lifted to 0.7% in 2017, before reaching 1.5% in 2018. Russia’s growth has been lifted to 1.8% in 2018, the same growth level as in 2017.
World Oil Demand:
World oil demand growth in 2017 was adjusted higher from the previous month by 74 tb/d, mainly to reflect better than expected data from China in 3Q17. As such, world oil demand growth for 2017 now stands at 1.53 mb/d to average 96.94 mb/d. For 2018, global oil demand growth is expected at around 1.51 mb/d, revised up by 0.13 mb/d from the previous month’s expectations reflecting the improved expectations from OECD Europe, OECD Asia Pacific, China, India and some African countries. Total oil demand is projected to average 98.45 mb/d in 2018.
World Oil Supply:
World oil supply in October increased by 0.53 mb/d m-o-m from the previous MOMR to average 96.71 mb/d, representing an increase of 0.17 mb/d y-o-y. non-OPEC oil supply, including OPEC NGLs, ws up by 0.68 mb/d m-o-m in October to average 64.12 mb/d. For 2017, non-OPEC supply is estimated to grow by 0.65 mb/d y-o-y in 2017 to average 57.67 mb/d, representing a downward revision of 0.02 mb/d from last month’s report. In October 2017, OPEC crude oil production decreased by 151 tb/d.
Product Markets and Refining Operations:
Product markets in Atlantic basin weakened in October due to seasonally-lower gasoline demand following the end of the U.S driving season. However U.S refinery margins have exhibited some improvement y-o-y on the back of the firm product demand and amid low stock levels. In Europe, solid middle of the barrel demand offset weakness at the to and bottom. Product markets in Asia also weakened slightly, but remained at healthy levels, supported by the onset of refinery maintenance.
Total OECD commercial oil stocks fell in September to stand at 2,985 mb. At this level, OECD commercial oil stocks are 154 mb above the latest five-year average. Crude and product stocks indicated a surplus of around 129 mb and 25 mb, respectively, above the seasonal norm.
Balance of Supply and Demand
Based on the current global oil supply/demand balance, OPEC crude in 2017 is estimated at 33.0 mb/d, around 0.71 mb/d higher than in 2016. OPEC crude in 2016 is estimated at 33.4 mb/d, about 0.46 mb/d higher than in 2017
Taglines: OPEC MOMR - crude oil price movements - world economy - world oil demand - world oil supply - product markets and refining operations - stock movements - Brent - WTI spread - OECD