Crude Oil Price Movements
The OPEC Reference Basket retreated in March by $1.60 to $52.46/b as the market refocused on the oversupply situation as demand remained subdued. ICE Brent and Nymex WTI futures contracts also fell $1.86 and
$2.87 to average $56.94/b and $47.85/b, respectively, for the month. The Brent-WTI spread widened to around $9/b.
World Economy
World economic growth for 2015 is forecast at 3.4%, unchanged from the previous report. The OECD growth estimate for the year also remains the same at 2.2%. US growth in 2015 remains unchanged at 2.9%, while better-than-expected growth in the Euro-zone has resulted in an upwardly revised forecast of 1.3%. In contrast, Japan’s growth has been revised lower to 0.8%. China’s growth forecast remains unchanged at 7.0% in 2015. India is forecast to see growth of 7.5% for the year. The most recent softening trend in the US and some major emerging markets will need to be carefully monitored.
World Oil Demand
World oil demand growth in 2014 was revised down marginally to 0.95 mb/d. For 2015, oil demand growth is anticipated to be around 1.17 mb/d, unchanged from the previous MOMR. Almost two thirds of 2015 oil demand growth is seen coming from China, Other Asia and the Middle East.
World Oil Supply
Non-OPEC oil supply growth in 2014 now stands at 2.17 mb/d, following an upward revision of 0.13 mb/d since the previous report. In 2015, non-OPEC oil supply is now projected to grow by 0.68 mb/d, following a downward revision of 165 tb/d compared to the previous assessment. US tight oil and Canadian oil sands output are expected to see lower growth following the recent strong declines in rig counts. OPEC NGLs are expected to grow by 0.19 mb/d in 2015, following growth of 0.18 mb/d last year. In March, OPEC crude
production increased by 0.81 mb/d to average 30.79 mb/d, according to secondary sources.
Product Markets and Refining Operations
Product markets remained healthy in the Atlantic Basin in March. Higher gasoline demand ahead of the driving season provided support amid tight sentiment fuelled by the heavy maintenance season and some outages in the US. Meanwhile, the Asian market exhibited a positive performance supported by the increasing light and middle distillates demand in several countries in the region.
Tanker Market
Dirty tanker spot freight rates declined in March, mainly due to declines in VLCC and Aframax spot freight rates, which fell by 14% and 3%, respectively. Freight rates in March were influenced by high tonnage availability and low tonnage demand ahead of refinery maintenance season in the East. High activity supported clean tanker spot freight rates for both East and West of Suez. On average, clean tanker spot freight rates edged up by 16% in March.
Stock Movements
OECD commercial oil stocks declined 10.4 mb in February to stand at 2,723 mb. At this level, stocks were 74 mb higher than the five-year average. Crude inventories showed a surplus of 106 mb, while product stocks remained 32 mb below the five-year average. In terms of days of forward cover, OECD commercial stocks stood at 60.9 days, some 2.8 days higher than the five-year average.
Balance of Supply and Demand
Demand for OPEC crude is estimated at 29.0 mb/d in 2014, a decline of 0.1 mb/d from the previous assessment. In 2015, required OPEC crude is projected at 29.3 mb/d, following an upward adjustment of 0.1 mb/d
Source: OPEC