Crude Oil Price Movements
The OPEC Reference Basket rose by $4.98 in October, to average $47.87/b. ICE Brent and NYMEX WTI also surged, up by $4.15 and $4.71, to average $51.39/b and $49.94/b, respectively. Prices were lifted by declining US oil inventory levels and discussions to bring forward market rebalancing. However, prices came under pressure from a rise in US oil rig counts, a stronger US dollar, and profit taking. The ICE Brent-NYMEX WTI spread narrowed to $1.45/b, encouraging US imports of Brent-related grades.
World Economy
World economic growth forecasts remain unchanged at 2.9% for this year and 3.1% for 2017. The OECD forecast also remains at 1.6% and 1.7% for 2016 and 2017, respectively, although growth in the Eurozone has been revised up to 1.6% and 1.3% for this and the coming year. The forecasts for China were also revised up to 6.7% in 2016 and 6.2% in 2017, while growth in India has been left unchanged at 7.5% for this year and 7.2% for the coming year. Russia is forecast to see a stronger recovery of 0.8% in 2017, following a contraction of 0.6% this year. Brazil’s growth was unchanged at 0.4% in 2017 after a contraction of 3.4% this year.
World Oil Demand
World oil demand growth is expected to increase by 1.23 mb/d in 2016 to average 94.40 mb/d. This follows a marginal downward adjustment to account for the slower-thanexpected performance of Latin America and the Middle East, which was almost entirely offset by better-than-expected oil demand growth data from OECD Europe and Asia Pacific. In 2017, world oil demand growth is seen at 1.15 mb/d, unchanged from the October MOMR to average 95.55 mb/d.
World Oil Supply
Non-OPEC oil supply in 2016 is now expected to contract by 0.78 mb/d, following a downward revision of around 0.1 mb/d from the October MOMR, to average 56.20 mb/d. In 2017, non-OPEC supply growth was revised down slightly by 10 tb/d to 0.23 mb/d, averaging 56.43 mb/d. OPEC NGLs are expected to average 6.43 mb/d in 2017, an increase of 0.15 mb/d over the current year. OPEC crude production, according to secondary sources, increased by 0.24 mb/d in October to average 33.64 mb/d.
Product Markets and Refining
Operations Product markets in the Atlantic Basin continued to strengthen in October. The positive performance of the middle of the barrel, amid stronger demand and falling inventories, allowed gasoil crack spreads to show a sharp recovery. Meanwhile, some outages fuelled a tightening sentiment in the gasoline market. In Asia, margins remained healthy, supported by stronger regional demand amid the peak of regional refinery maintenance.
Tanker Market
Tanker market sentiment experienced a general improvement in October, as freight rates in both dirty and clean segments of the market increased. Dirty tanker spot freight rates averaged 13% higher over the previous month on the back of improved tonnage requirements and seasonal demand, with VLCCs achieving the highest gains. Chartering activities edged up in October, although mostly remaining below year-ago levels.
Stock Movements
OECD total commercial stocks fell in September to stand at 3,052 mb, some 304 mb above the five-year average, as crude and product inventories showed surpluses of 165 mb and 138 mb, respectively. In terms of days of forward cover, OECD commercial inventories stood at 65.7 days in September, some 6.5 days above the seasonal average.
Balance of Supply and Demand
Demand for OPEC crude in 2016 is estimated to stand at 31.9 mb/d, a gain of 1.9 mb/d over last year. In 2017, demand for OPEC crude is forecast at 32.7 mb/d, an increase of 0.8 mb/d over the current year.
Source: OPEC