OPEC MONTHLY OIL REPORT
Crude Oil Price Movements:
In September, Crude oil futures saw new highs as ICE brent averaging above $55/b supported by increased evidence of market rebalancing. Geopolitical tensions and lower distillates stocks also pushed the oil prices high. ICE Brent averaged at $55.51/b in Sep, a gain of $3.64 while NYMEX WTI increased $1.82 to average $49.88/b. The OPEC crude basket rose to $53.44/b in September, its highest value since July, 2015. The sweet/sour spread widened significantly in Asia and Europe.
World Economy growth continues to improve, with the forecast for 2017 revised up to 3.6% from 3.5% in last month’s report. Similarly, the 2018 forecast has been adjusted higher to 3.5% from 3.4%. The OECD is seen growing by 2.2% in 2017 and by an upwardly revised 2.1% in 2018. U.S growth in 2018 has been revised up to 2.3% and the EU to 1.9% for the same year. Russia has also seen an upward revision for 2018 to now stand at 1.6%, compared to 1.4% in the previous report. Growth expectations for india and China were left unchanged for both 2017 and 2018.
World Oil Demand:
World oil demand growth in 2017 is now expected to increase by 1.5 mb/d, representing an upward revision of around 30 tb/d from last previous report, mainly reflecting recent data showing an improvement in economic activities. Positive revisions were primarly a result of higher-than-expected oil demand from the OECD region and China. In 2018, world oil demand is anticipated to grow by 1.4 mb/d, following an upward adjustment of 30 tb/d over the previous report, due to the improving economic outlook in the world economy particularly China and Russia.
World Oil Supply:
Non-OPEC oil supply is expected to grow by 0.7 mb/d in 2017, following downward revision of 0.1m/bd from the previous report. In 2018, the growth in non-OPEC oil supply saw a downward revision of 60 tb/d to stan at 0.9 mb/d. In September, OPEC crude oil production increased by 99 tb/d, according to secondary sources, to average 32.75 mb/d.
Product Markets and Refining Operations:
Product markets in the Atlantic basic improved further in September as the top of the barrel saw support from higher gasoline demand. Middle distillate markets continue to improve globally on the back of healthy demand, depleted stocks and along with regional refinery maintenance. However, the bottom of the barrel in Asia and Europe saw some pressure on low demand and high inventory levels. Product markets are expected to see support in 4Q17 from healthy demand for winter fuels.
Total OECD commercial oil stocks fell in August to stand at 2.996 mb. At this level, OECD commercial oil stocks are 171 mb above the latest five-year average. Crude and product stocks indicate a surplus of around 146 m and 25 mb above the seasonal norm, respectively.
Balance of Supply and Demand
Demand for OPEC crude in 2017 is estimated to stand at 32.8 mb/d, some 0.6 mb/d higher than the 2016 level. In 2018, demand for OPEC crude is forecast at 33.1 mb/d, about 0.3 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
By Srinivas Chowdary Sunkara