OPEC MONTHLY OIL REPORT (MOMR) - HIGHLIGHTS
Crude Oil Price Movements:
In August, Crude futures rose for the second - consecutive month. WTI rose 3.0% to $48.06/b in New York and Brent ended 5.5% higher at $51.87/b in London. year-to-date, Both were more than 20% higher. The Brent - WTI spread widened to $4 /b in August. The OPEC reference basket averaged $49.60/b in August representing a gains of about 6% m-o-m. y-t-d , the Basket was almost 30.9% higher or $11.74 at $49.73/b.
The forecast for global economic growth was revised up to 3.5% for 2017 . OECD’s GDP growth in 2017 was revised up to 2% with strong growth support in Euro-zone and U.S during first half of 2017. Additionally major emerging economies held up well, as China growth in 1H17 is forecasted to reach 6.7% in 2017 and 6.3% in 2018. India’s 1H17 growth dynamic was negatively impacted by major structural reforms like GST and demonetisation and it is estimated to remain supported at 6.9% in 2017 and to rebound at 7.5% in 2018. Russia and Brazil are on track of recovery and forecasted to grow by 1.5% and 0.5% in 2017 and by 1.4% and 1.5% in 2018, respectively.
World Oil Demand
World oil demand growth in 2017 is now pegged at 1.42 mb/d, with total global consumption at 96.77 mb/d. In 2017, world oil demand growth was revised higher by around 50tb/d. World oil demand growth for 2018 was also revised up by around 70tb/d from the previous month’s report. It is now anticipated to be 1.35 mb/d, with total global consumption of around 98.12 mb/d. OECD oil demand growth was revised upward for the second consecutive month by 60tb/d to average 0.37 mb/d. Oil demand has been quite robust in 2Q17, particularly in the America and Europe.Mexican oil demand negative in July declining 2.7% y-o-y. In Canada, June came up strongly, increasing y-o-y for the second consecutive month.In 2018, Canadian oil demand is projected to remain roughly at 2017 levels, showing only marginal increases with balanced risks.
World Oil Supply
Preliminary data indicates that world oil supply was down by 0.41 mb/d m-o-m in August to average 96.75 mb/d, higher by 1.66 mb/d, y-o-y. Non-OPEC oil supply in August declined by 0.32 mb/d m-o-m to average 57.68 mb/d. Non-OPEC supply is projected to grow by 0.78 mb/d y-o-y in 2017, which is unchanged from last month’s prediction due to the offsetting of the upward revision in the FSU by the downward revision in OECD Americas, to average 57.80 mb/d. Non-OPEC oil supply growth in 2018 is expected at 1 mb/d following a downward revision of 0.10 mb/d to average of 58.8 mb/d. The U.S, Brazil, Canada, UK and Congo are expected to be the key countries driving growth next year, as opposed to China, Mexico. Colombia, Azerbaijan and Oman, which are expected to see a further decline in oil supply.
Product Markets and Refining Operations
Refinery margins in Atlantic Basin strengthened in August. In the US, margins rose amid expectations for the product supply shortfall in the wake of Hurricane Harvey, coupled with already firm domestic demand, which supported product crack spreads. In Europe and Asia, product markets were supported by supply outages in the US, which encouraged higher arbitrage volumes, as well as healthy seasonal demand, which helped lift refinery margins.
Total OECD commercial oil stocks fell in July to stand at 3,002 mb. At this level, OECD commercial oil stocks were 195 mb above the latest five-year average. Crude and product stocks indicate a surplus of around 123 mb and 72mb above the seasonal norm, respectively. In terms of days of forward cover, OECD commercial stocks stood at 62.9 days in July, some 2.7 days higher than the five-year average.
Balance of Supply and Demand
Demand for OPEC crude in 2017 is estimated to stand at 32.7 mb/d, some 0.5 mb/d higher than the 2016 level. In 2018, demand for OPEC crude is forecast at 32.8 mb/d, about 0.2 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