The OPEC Reference Basket ended January down $15.08 or 25% to average $44.38/b, reaching its lowest value in six years as excess supply and weak demand continued to weigh on the crude oil market. ICE Brent ended January at $49.76/b, down $13.51 from the previous month. Nymex WTI lost $11.96 to stand at $47.33/b. The Brent-WTI spread narrowed to $2.43/b.

World Economy
World economic growth for 2014 remains unchanged, while the decelerating trend in emerging and developing countries has led to a revision in the 2015 forecast to 3.4% from 3.6%. OECD growth is unchanged at 1.8% for 2014 and 2.2% in 2015. China’s 2015 growth forecast has been revised to 7.0% from 7.2%, while India’s positive trend has lifted the 2015 growth forecast from 5.8% to 6.0%. Russia’s 2015 growth forecast has been revised from 0% to show a contraction of 2.4%, while Brazil is now expected to grow by 0.7% in 2015, compared to 1.0% previously.

World Oil Demand
Global oil demand growth in 2014 is expected to be around 0.96 mb/d, broadly unchanged from last month’s report. In 2015, world oil demand is projected to rise by 1.17 mb/d slightly higher than in the previous report, mainly to reflect expectations of an uptick in oil requirements in OECD Americas.

World Oil Supply
Non-OPEC oil supply growth in 2014 has been revised up slightly to 1.99 mb/d. This revision was mostly driven by higher output in OECD, Brazil, Kazakhstan and China in 4Q14, partially offset by downward revisions from Azerbaijan, Other Asia Pacific, Australia and Mexico. In 2015, non-OPEC oil supply is projected to grow by 0.85 mb/d, down 0.42 mb/d from the previous assessment. OPEC NGLs are forecast to grow by 0.20 mb/d
to 6.03 mb/d in 2015. In January, OPEC crude production decreased by 53 tb/d to average 30.15 mb/d, according to secondary sources.

Product Markets and Refining Operations
Product markets strengthened in the Atlantic Basin in January. Lower refinery runs supported light and middle distillate crack spreads in the US, while export opportunities lent additional support to the European market. In Asia, product markets strengthened slightly in January, as limited supplies of naphtha and fuel oil allowed margins to rise, despite the pressure of increasing gasoline and middle distillate supplies.

Tanker Market
A general improvement in sentiment was seen in the dirty tanker market on the back of weather conditions, port delays and tight tonnage availability. Clean tanker freight rates improved East of Suez, but encountered a decline in the west, partially due to the weak medium-range tanker market. OPEC and Middle East sailings were higher than a month ago with arrivals in North America and West Asia increasing while arrivals in Europe and
the Far East fell from the previous month.

Stock Movements
OECD commercial oil stocks declined by 18.5 mb in December to stand at 2,678 mb. At this level, inventories were 43 mb higher than the five-year average. Crude showed a surplus of 78 mb, while product stocks remained 35 mb below the five-year average. In terms of days of forward cover, OECD commercial stocks stood at 58.6 days, 1.7 day higher than the five-year average.

Balance of Supply and Demand
Demand for OPEC crude is estimated at 29.1 mb/d in 2014, unchanged from the last report. In 2015, required OPEC crude is projected at 29.2 mb/d, following an upward adjustment of 0.4 mb/d.
Source: OPEC