The OPEC Reference Basket recovered in February for the first time in three months, gaining 8.4% or $2.22 to reach $28.72/b. Crude oil futures were mixed, with ICE Brent ending up $1.60 to reach $33.53/b, while Nymex WTI fell by $1.16 to stand at $30.62/b. The Brent-WTI spread halted its narrowing trend, widening by $2.76 to $2.91/b.

World Economy
World economic growth has been revised down for this year to 3.1%, after estimated growth of 2.9% in 2015. OECD growth in 2016 has been revised lower to 1.9%, slightly below the 2.0% seen in 2015. In the emerging economies, India and China are seen continuing to expand at a considerable pace of 7.5% and 6.3%, respectively. Brazil and Russia, however, are now forecast to see a larger than expected contraction in 2016.

World Oil Demand
World oil demand growth for 2015 stands at 1.54 mb/d to average 92.98 mb/d, in line with the previous report. Global oil demand growth for 2016 also remains unchanged at around 1.25 mb/d to average 94.23 mb/d.

World Oil Supply
Non-OPEC oil supply growth for 2015 has been revised up by 100 tb/d to 1.42 mb/d for an average of 57.09 mb/d. This revision was mostly driven by upward adjustments to 4Q15 data in the OECD. In 2016, non-OPEC oil supply is forecast to contract by 0.70 mb/d to average 56.39 mb/d. OPEC NGLs are expected to increase by 0.17 mb/d this year, following growth of 0.15 mb/d in 2015. In February, OPEC crude production, according to secondary sources, decreased by 175 tb/d to average 32.28 mb/d.

Product Markets and Refining Operations
Despite strong gasoline demand, the oversupply environment exerted pressure on the product market and caused margins to weaken in the Atlantic basin. Meanwhile, in Asia light distillates oversupply caused the gasoline and naphtha crack spreads to suffer a sharp fall. This, along with the continued weakening at the middle of the barrel, caused refinery margins to exhibit a sharp loss in the region.

Tanker Market
Dirty tanker spot freight rates declined in February, with rates falling for almost all vessels on all reported routes. The drop was mainly due to limited activity and holidays in the East. The only exception was Aframax rates for Caribbean’s loadings, which were supported by bad weather conditions. The clean tanker market experienced the same general negative trend in February, as rates dropped both East and West of Suez by 14% and 18%, respectively.

Stock Movements
OECD commercial oil stocks rose in January to stand at 3,023 mb. At this level, inventories were around 328 mb higher than the five-year average, with crude and products showing a surplus of around 244 mb and 84 mb, respectively. In days of forward cover, OECD commercial stocks stood at 65.3 days in January, some 6.8 days higher than the five-year average.

Balance of Supply and Demand
Demand for OPEC crude in 2015 is estimated to average 29.7 mb/d, following a downward revision of 0.1 mb/d from last month’s report and broadly unchanged from the previous year. In 2016, demand for OPEC crude is expected to stand at 31.5 mb/d, 0.1 mb/d, lower than last month, and representing an increase of 1.8 mb/d over the previous year.
Source: OPEC