The OPEC Reference Basket slipped in November, despite the increase in global crude oil prices late in the month, dropping $1.50 to stand at $106.86/b. Year-to-date the Basket averaged $109.70/b, a gain of $2.32/b or 2.15% over last year. Economic worries continued to outweigh ongoing concerns about supply distributions. Some easing in revived geopolitical factors also helped to dampen concerns that had push prices higher in the middle of the month. In the crude futures markets, money managers reversed course in November and increased net long positions. This added speculative pressure and supported the rise in crude oil prices at the end of the month. On 10 December the Basket stood at $105.01/b.
Global economic growth in 2013 remains at 3.2%, but has been revised down for 2012 to 3.0% from 3.1%. US economic growth has been robust and its forecast remains at 2.2% in 2012 and 2.0% in 2013. In Japan, a significant deceleration has led to a revision in growth to 1.6% from 2.2% in 2012 and to 0.6% from 1.1% in 2013. The contraction in the Euro-zone appears to have bottomed out in 3Q12 and the growth forecast has been revised to minus 0.4% from minus 0.5% for 2012, while next year’s growth is forecast unchanged at 0.1% for 2013. China is still expected to grow at 8.0% in 2013 after estimated growth of 7.6% this year. While India’s forecast for 2013 is unchanged at 6.6%, the sharper-than-expected deceleration in the 3Q12 has caused the growth estimate for 2012 to be revised down to 5.5% from 5.7% in the previous forecast.
World oil demand growth in 2012 is forecast at 0.8 mb/d, unchanged from the previous assessment, and the same growth is expected for next year at 0.8 mb/d. Oil demand growth in 4Q12 is estimated at 1.0 mb/d y-o-y. This is almost double the growth in 3Q12, as US oil demand moved from deep contraction to minor growth.
Non-OPEC supply growth is projected at 0.5 mb/d in 2012, steady since the last assessment, supported by strong anticipated growth from the US and Canada, despite disruptions in some countries. Non-OPEC supply growth in 2013 is forecast to stand at 0.9 mb/d, unchanged from the previous month. OPEC NGLs and nonconventional oils are expected to average 5.7 mb/d in 2012, a gain of 0.4 mb/d over the previous year, and 6.0 mb/d in 2013, an increase of 0.2 mb/d over the current year. In November, OPEC crude oil production averaged 30.78 mb/d, according to secondary sources, a decline of 0.21 mb/d from the previous month.
Product markets in November continued the decline seen in October. This was mainly due to further losses at the top and bottom of the barrel. Gasoline cracks continued to plummet worldwide following seasonal low demand amid increased supplies, as refineries returned from maintenance.
An oversupply of fuel oil amid lower bunker demand intensified bearish sentiments at the bottom of the barrel. These factors have led to a fall in refinery margins across the board. So far, the winter season has not yet lent sufficient support to distillates to offset the market’s generally bearish mood.
In the tanker market, freight rates for the dirty tanker market saw a general improvement in November compared to the previous month. On average, VLCC and Aframax freight rates increased by 22% and 5% respectively. Suezmax saw the only negative performance, declining by 3% from a month ago. The improvements seen in freight rates came as a result of higher market activities and an enhanced tonnage supply/demand balance. The clean tanker freight rates were mixed in November, with East of Suez freight rates up by 11%, while West of Suez freight rates lost 5% from a month earlier. OPEC spot fixtures gained 13.8% from the previous month to average 13.82 mb/d.
Preliminary data for October shows that total OECD commercial oil stocks fell by 12.3 mb but remained 38.0 mb above the last five year average, and 75.0 mb higher than a year ago at the same period. OECD commercial stocks stood at around 59.5 days at the end of October, 2.4 days higher than the last five year average. The latest information shows that US total commercial oil stocks fell by 6.4 mb in November, but they indicated a surplus of 35.1 mb with the five year average and 16.7 mb higher than a year ago. The fall in US total  commercial oil stocks was attributed to both crude and products as they declined by 3.1 mb and 3.4 mb respectively.
Demand for OPEC crude for this year remained unchanged from the previous assessment to stand at 30.1 mb/d, showing a decline of 0.1 mb/d when compared to 2011. The required OPEC crude is forecast to average 29.7 mb/d, 0.4 mb/d lower than 2012 level and remained at the same level as estimated in the previous report.
Source: OPEC