The OPEC Reference Basket averaged $44.83/b in September, representing a decline from the previous month of 63¢. Fundamentals factors that have weighed on the market for more than a year have persisted, but are starting to show signs of alleviation. ICE Brent averaged $48.54/b, a gain of 33¢ over the previous month, and Nymex WTI averaged $45.47/b, up $2.58. The Brent-WTI spread narrowed sharply from $5.32/b to $3.07/b.

World Economy
World economic growth remains unchanged at 3.1% for 2015 and 3.4% for 2016. OECD growth also remains unchanged for both years at 2.0% and 2.1%, respectively. Key emerging economies are increasingly facing challenges and while the growth forecast for China and India remains unchanged, both Brazil’s and Russia’s growth have been revised down by 0.2 percentage points for 2015 and 2016.

World Oil Demand
World oil demand growth in 2015 is foreseen to rise by 1.50 mb/d, following an upward revision of around 40 tb/d, mostly due to better-than-expected data in 3Q15. Total oil demand is now forecast at 92.86 mb/d. In 2016, world oil demand is anticipated to rise by 1.25 mb/d, following a downward revision of 40 tb/d, mainly to reflect the high base-line effect. As a result, world oil demand is forecast to reach 94.11 mb/d.

World Oil Supply
Non-OPEC oil supply growth in 2015 now stands at 0.72 mb/d, following a downward revision of 0.16 mb/d from the previous report, attributed mainly to a downward adjustment
in the US. For 2016, non-OPEC oil supply is expected to show a clear contraction of 0.13 mb/d, following a downward revision of 0.29 mb/d compared to the previous assessment. OPEC NGLs are expected to grow by 0.17 mb/d in 2016, following growth of 0.19 mb/d this year. In September, OPEC crude production increased by 109 tb/d to average 31.57 mb/d, according to secondary sources.

Product Markets and Refining Operations
Product markets in the Atlantic Basin weakened during September due to a sharp drop in the gasoline crack spread following the end of the US driving season. Combined with increasing inventories, this caused the refinery margins to fall in the region. Asian margins strengthened on the back of tightening sentiment, fuelled by the onset of regional refinery maintenance and a downward correction in Dubai crude prices.

Tanker Market
Dirty vessel spot freight rates saw mixed movements in September, with VLCCs showing the strongest growth. Compared to the previous month, VLCC and Suezmax spot freight rates increased by 27% and 5%, respectively, while Aframax rates declined. Chartering activities in the Middle East and West Africa, along with port delays, supported the gains. In the clean tanker market, West of Suez activities were behind the marginal increase in spot freight rates, while East of Suez rates remained weak.

Stock Movements
OECD commercial oil stocks rose further in August to stand at 2,933 mb. At this level, inventories were around 194 mb higher than the five-year average. Crude and products showed a surplus of around 167 mb and 27 mb, respectively. In terms of days of forward cover, OECD commercial stocks stood at 63.3 days in August, some 4.5 days higher than the five-year average.

Balance of Supply and Demand
Demand for OPEC crude in 2015 is estimated to stand at 29.6 mb/d, 0.3 mb/d higher than the previous report and 0.6 mb/d above the previous year’s level. In 2016, demand for OPEC crude is forecast at 30.8 mb/d, an increase of 0.5 mb/d over the previous report and around 1.2 mb/d higher than the current year.
Source: OPEC