Amid a continuation of the previous month’s bullish factors, the OPEC Reference Basket moved up again in May to a new high for the year. The Basket averaged $62.16/b for the month, representing a gain of $4.86/b. An increase in crude oil demand, firm refined product markets and inventories drawdowns were key elements supporting the market.

World Economy
Expectations for global economic growth remain unchanged at 3.3% for 2015, in line with growth in 2014. The OECD is seen growing at 2.1% in 2015, up from 1.8% last year. US growth for 2015 has been revised down to 2.4%, due to the lower-than-expected growth in
the first quarter. Growth in the Euro-zone has been revised up to 1.4% for 2015 and Japan’s growth has also been adjusted higher to 1.0%. Expectations for China and India in 2015 remain unchanged at 6.9% and 7.5%, respectively.

World Oil Demand
Global oil demand is seen growing at 1.18 mb/d in 2015, higher than in the previous year’s growth of 0.96 mb/d and unchanged from last month’s report. Total oil consumption is expected to pick up pace in 2H15, leading to a total oil demand of 92.50 mb/d for 2015.

World Oil Supply
Non-OPEC oil supply in 2015 is projected to grow by 0.68 mb/d, in line with the previous forecast and below last year’s strong growth of 2.17 mb/d. OPEC NGLs are forecast to grow by 0.19 mb/d to average 6.02 mb/d in 2015, following growth of 0.18 mb/d in 2014. In May, OPEC production rose to 30.98 mb/d, up by 0.02 mb/d, according to secondary sources.

Product Markets and Refining Operations
Product market developments in the Atlantic Basin were mixed during May. The start of the US driving season pushed up gasoline demand, hitting levels not seen in more than five years. This provided strong support to crack spreads on the top of the barrel and offset the weakness seen at the bottom of the barrel. In the Asian market, refinery margins strengthened on the back of higher regional demand amid tightening sentiment due to the maintenance season.

Tanker Market
The dirty tanker market enjoyed a general improving sentiment in May for vessels in all reported classes on the back of high tonnage demand and increased activities. Clean tanker freight rates declined on average, mainly as freight rates reported on the West of Suez were weak. In May, OPEC and Middle East sailings were higher month-on-month, as arrivals in all regions improved, except in the Far East.

Stock Movements
OECD commercial oil stocks rose further in April to stand at 2,776 mb. At this level, inventories are 105 mb higher than the five-year average, with crude and products indicating surpluses of around 89 mb and 16 mb, respectively. In terms of days of forward cover, OECD commercial stocks stood at 61.3 days in April, 3.0 days higher than the fiveyear average.

Balance of Supply and Demand
Demand for OPEC crude in 2015 is projected at 29.3 mb/d, unchanged from the previous report and representing a gain of 0.3 mb/d over last year. The estimate for demand for OPEC crude in 2014 remains unchanged at 29.0 mb/d.
Source: OPEC