Crude Oil Price Movements

In November, the OPEC Reference Basket (ORB) fell by $6.86, or 7.5%, m-o-m to average $84.92/b. Oil futures prices trended lower amid increased volatility, with the ICE Brent front-month contract dropping by $6.67, or 7.5%, m-o-m to $82.03/b, and the NYMEX WTI front-month contract dropping by $8.09, or 9.5%, to average $77.38/b. The DME Oman front-month contract dropped by $6.25, or 7.0%, m-o-m to settle at $83.06/b. The front-month ICE Brent/NYMEX WTI spread widened by $1.42 in November to average $4.65/b. The market structure weakened, with the front end of the ICE Brent and DME Oman futures forward curves flattening, while the nearest NYMEX WTI timespreads flipped into contango. Over the month, hedge funds and other money managers substantially reduced bullish positions, contributing to increased price volatility and exerting downward pressure on futures prices.

World Economy

The forecast for world economic growth is revised up slightly to 2.9% for 2023, but remains unchanged at 2.6% for 2024. US economic growth is revised up to 2.4% for 2023 and 1.0% for 2024. Eurozone economic growth remains unchanged at 0.2% for 2023 and 0.5% for 2024. Japan’s economic growth is revised down to 1.7% for 2023 and 0.9% for 2024. China’s forecast remains unchanged at 5.2% for 2023 and 4.8% for 2024. India’s growth forecast is revised up to 6.5% for 2023, while growth for 2024 remains unchanged at 5.9%. Brazil’s forecast also remains unchanged at 2.5% for 2023 and 1.2% for 2024. Russia’s economic growth forecast is revised up to 2.2% for 2023 and 1.3% for 2024.

World Oil Demand

The world oil demand growth forecast for 2023 remains unchanged from last month’s estimate at 2.5 mb/d. Downward revisions in the OECD Europe and Asia Pacific in 3Q23 and 4Q23 are offset by upward revisions in OECD Americas. Similarly, in the non-OECD, downward adjustments to the Middle East and Africa in 3Q23 and 4Q23 were offset by upward revisions in China, Other Asia, and Latin America. Oil demand in the OECD is expected to grow by around 0.1 mb/d in 2023 and by 2.4 mb/d in the non-OECD. For 2024, world oil demand is expected to grow by a healthy 2.2 mb/d, unchanged from the previous month’s assessment. The OECD is expected to expand by about 0.3 mb/d, with OECD Americas contributing the largest increase. The non-OECD is expected to increase by around 2.0 mb/d, led by growth in China, India, the Middle East, and Other Asia.

World Oil Supply

The non-OPEC liquids supply growth forecast remains unchanged at 1.8 mb/d for 2023. The main drivers of liquids supply growth in 2023 include the US, Brazil, Kazakhstan, Norway, Guyana, Mexico and China. For 2024, non-OPEC liquids production is expected to expand by 1.4 mb/d, broadly unchanged from the previous month’s assessment. The main drivers for liquids supply growth next year are expected to be the US, Canada, Guyana, Brazil, Norway and Kazakhstan. The largest declines are anticipated in Mexico and Malaysia. OPEC NGLs and non-conventional liquids are forecast to grow by around 50 tb/d to average 5.4 mb/d in 2023 and by another 65 tb/d in 2024 to average 5.5 mb/d. OPEC-13 crude oil production in November dropped by 57 tb/d m-o-m to average 27.84 mb/d, according to available secondary sources.

Product Markets and Refining Operations

In November, refinery margins decreased in the US Gulf Coast (USGC) as losses were seen across the barrel, except gasoil. US gasoline crack spreads continued to drop seasonality. This, coupled with rising refinery product output following the conclusion of heavy maintenance turnarounds, weighed on USGC refining economics. In Rotterdam and Singapore, margins remained under pressure, although slight improvements were seen m-o-m as refining margins were supported by lower feedstock prices and a positive performance at the top section of the barrel, backed by planned stock builds ahead of the year-end holiday season. Suppressed product exports from China also helped to sustain margins, particularly in Southeast Asia. Global refinery intakes witnessed a recovery in November, with a 1.7 mb/d rise to average 80.2 mb/d. Y-o-y, global intakes were 817 tb/d higher. In the coming months, with refineries back online, intakes are expected to be supported, although weakening margins may limit the upside.

Tanker Market

Dirty freight rates recovered further in November, on tightening availability, although they remained below the volatile levels seen in the same month last year. VLCC spot freight rates saw healthy gains, with rates on the Middle East-to-East route rising by 30% m-o-m. Suezmax rates saw a more measured increase, building on a spike in rates the month before. Suezmax rates on the USGC-to-Europe route increased by 9% m-o-m. Aframax rates rose, although gains were more muted East of Suez. Around the Mediterranean, Aframax rates rose by around 17% m-o-m. Clean rates saw mixed movement, with East of Suez rates falling by 24% m-o-m, while West of Suez rates rose 28%.

Crude and Refined Products Trade

Preliminary data shows US crude imports broadly stable at an average of 6.3 mb/d in November, while crude exports increased to 4.8 mb/d, the highest since March 2022. Meanwhile, China’s crude imports recovered some of the previous month’s decline, averaging 11.6 mb/d in October, a gain of almost 4% m-o-m. China’s product exports slipped a further 8% m-o-m, with drops driven by gasoline, naphtha, and other products category. Following seven months of declines dating back to February 2023, India’s crude imports increased, averaging 4.4 mb/d in October. India’s product imports were the second-highest on record, driven by gains in LPG, naphtha and gasoline. Japan’s crude imports declined by about 12% in October to average 2.3 mb/d. Product exports, including LPG, dropped from a seven-month high in September to average 494 tb/d. Declines were seen across most major products, except gasoline. Preliminary estimates show OECD Europe crude imports increasing slightly in November, while product imports are also seen gaining momentum.

Commercial Stock Movements

Preliminary data for October 2023 shows total OECD commercial oil stocks down by 12.8 mb, m-o-m. At 2,818 mb, they were 128 mb below the 2015–2019 average. Within the components, crude stocks rose by 11 mb, m-o-m, while products stocks fell by 23.8 mb, m-o-m. OECD commercial crude stocks stood at 1,342 mb in October, which is 112 mb lower than the 2015–2019 average. Total product stocks stood at 1,476 mb, which is 16 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial stocks in October remained unchanged, m-o-m, to stand at 61.7 days. This is 0.7 days less than the 2015–2019 average.

Balance of Supply and Demand

Demand for OPEC crude in 2023 remains unchanged from the previous month’s assessment to stand at 29.1 mb/d. This is around 0.6 mb/d higher than in 2022. Demand for OPEC crude in 2024 also remains unchanged from the previous month’s assessment to stand at 29.9 mb/d, which is 0.8 mb/d higher than the estimated level in 2023.
Source: OPEC