The OPEC Reference Basket fell $1.23 in March to average $104.15/b. Global crude oil markets were impacted by the slowing pace of economic growth in China, lower refinery demand, and ample supply, which outweighed supply disruptions and geopolitical tensions. The Nymex WTI front-month slipped by a marginal 17¢ to average $100.51/b, while ICE Brent dropped $1.09 to average $107.75/b. This caused the Brent-WTI spread to narrow further, averaging $7.25/b in March.

World Economy
World economic growth for 2014 has been revised down to 3.4%, while the 2013 growth estimate remains at 2.9%. The OECD is forecast to grow by 2.0% in 2014, compared to 1.3% in the previous year. China’s growth for 2014 has been revised down to 7.5%, following growth of 7.7% in 2013. India’s 2014 forecast remains at 5.6% and the estimate for 2013 at 4.7%.

World Oil Demand
World oil demand is forecast to grow by 1.14 mb/d in 2014, broadly unchanged from the previous report, to average 91.2 mb/d. In 2013, world oil demand grew by 1.05 mb/d to average 90.01 mb/d, also in line with the prior assessment. The bulk of growth came from non-OECD, as most of the OECD is still showing a contraction.

World Oil Supply
Non-OPEC oil supply growth in 2014 was revised up to stand at 1.37 mb/d. The estimate for 2013 growth was also increased slightly to 1.34 mb/d. Growth this year is seen coming mainly from the US, Canada, and Brazil, while Norway, UK and Mexico are expected to decline. OPEC NGL production is forecast to average 5.95 mb/d in 2014. In March, OPEC crude oil production as estimated by secondary sources averaged 29.61 mb/d, down by 0.63 mb/d from a month ago.

Product Markets and Refining Operations
Product markets in the Atlantic Basin have begun to weaken since mid-March on diminished support from heating fuel demand in the US. Product markets in Europe have also weakened due to a decline in export opportunities. In Asia, the negative performance at the middle and bottom of the barrel outweighed the continued recovery in light distillates.

Tanker Market
Dirty tanker spot freight rates declined in March, mainly on the back of lower tonnage demand and refinery maintenance in the east. Tonnage availability on many key routes continued to pressure tanker spot freight rates, which declined 5%. Clean tanker spot freight rates improved, with east and west of Suez rates up by 7% and 10% respectively.

Stock Movements
OECD commercial oil stocks continued to fall in February, driven by a decline in products, as crude stocks experienced a build. Compared to the five-year average, crude and product stocks showed a deficit of 35 mb and 96 mb, respectively. In terms of days of forward cover, OECD commercial stocks rose by 0.2 days in February to stand at 56.5 days. In March, US total commercial oil stocks rose, but remained 36.0 mb below the five-year average, with crude around 11.1 mb above the seasonal norm.

Balance of Supply and Demand
Demand for OPEC crude in 2014 saw a downward revision of 0.1 mb/d to average 29.6 mb/d, representing a decline of 0.4 mb/d compared to last year. Demand for OPEC crude in 2013 remains unchanged from the last MOMR at 30.0 mb/d, which is 0.5 mb/d lower than the previous year.
Source: OPEC