The OPEC Reference Basket averaged $54.06/b in February, representing a gain of $9.68 or nearly 22% amid a pickup in prompt demand from Europe and Asia and optimism that oil prices may have reached bottom. ICE Brent rose $9.04 to $58.80/b, while Nymex WTI gained $3.40 to stand at $50.72/b. The Brent-WTI spread widened to above $8/b in February.

World Economy
World economic growth for 2014 is now seen at 3.3%, up from growth of 3.2% in the previous report. Global economic growth in 2015 remains unchanged at 3.4%. The OECD
growth estimate is unchanged at 1.8% for 2014 and 2.2% in 2015. China’s growth forecast
remains at 7.4% for 2014 and 7.0% for 2015. The growth forecasts for India in 2014 and 2015 have been revised higher to 7.2% and 7.5%, respectively, following large revisions by the country’s statistical office. Russia is now expected to see a contraction of 3.2% in 2015, compared to a contraction of 2.4% in the previous report. Brazil’s growth in 2015 has also
been revised lower to 0.2%, from 0.7% previously.

World Oil Demand
The estimate for world oil demand growth in 2014 remains broadly in line with the previous report at 0.96 mb/d. For 2015, global oil demand growth is expected to average 1.17 mb/d, relatively unchanged from the previous month. Almost half of 2015 oil demand growth is
projected to come from China and the Middle East.

World Oil Supply
Non-OPEC oil supply growth in 2014 is now expected at 2.04 mb/d, following an upward revision of 0.05 mb/d from the last report, mostly due to stronger-than-expected growth in 4Q14. In 2015, non-OPEC oil supply is projected to grow by 0.85 mb/d, unchanged from the previous assessment. OPEC NGLs in 2015 are forecast to grow by 0.19 mb/d. In February, OPEC crude production declined by 0.14 mb/d to 30.02 mb/d, according to secondary  sources.

Product Markets and Refining Operations
Product markets continued strengthening in the Atlantic Basin in February. The more bullish sentiment was fuelled by the heavy maintenance season and some outages in the US, at a time when colder weather boosted demand for heating fuels. Meanwhile, the Asian market maintained most of the previous month’s recovery with support from stronger light distillate demand, which allowed margins to remain healthy.

Tanker Market
Dirty tanker spot freight rates were mixed in February. VLCC and Suezmax rates encountered declines, mainly on the back of low activity and holidays in the east, while Aframax freight rates increased partially as a result of a tightening positions list, weather conditions and port delays. Freight rates on all reported routes remain higher than the same month a year ago.

Stock Movements
OECD commercial oil stocks fell in January by 5.0 mb to stand at 2,695 mb. At this level, inventories are 22 mb higher than the five-year average. Crude showed a surplus of 54 mb, while product stocks remained 32 mb below the five-year average. In terms of days of forward cover, OECD commercial stocks stood at 59.3 days, 1.5 days higher than the five-year average.

Balance of Supply and Demand
Demand for OPEC crude is estimated at 29.1 mb/d in 2014, broadly unchanged from the  previous assessment. In 2015, required OPEC crude is projected at 29.2 mb/d, also unchanged from a month earlier.
Source: OPEC