Crude Oil Price Movements
The OPEC Reference Basket lost $6.86 in December to average $33.64/b. Persistent oversupply coupled with increasing signs of a slowing pace of growth in the Chinese economy exerted pressure on the oil market. ICE Brent was down $7.03 at $38.90/b, while Nymex WTI fell by $5.60 to $37.33/b. The Brent-WTI spread narrowed significantly to $1.58/b from $3/b in the previous month.

World Economy
World economic growth for 2015 has been revised down to 3.0% from 3.1%, while the forecast for 2016 remains unchanged at 3.4%. The growth risk is seen skewed to the downside as both emerging and some OECD economies are facing several challenges. OECD growth remains unchanged at 2.0% and 2.1% for 2015 and 2016, respectively. Also, growth in China remains at 6.8% and 6.4%, while India’s growth numbers remain at 7.3% and 7.6%, respectively.

World Oil Demand
World oil demand is estimated to have increased by 1.54 mb/d in 2015 to average 92.92 mb/d. This represents a minor 10 tb/d upward adjustment, mainly reflecting an uptick in oil requirements in the OECD Europe and Other Asia in the 3Q15. In 2016, oil demand growth is expected to be around 1.26 mb/d, marginally higher than in the previous report, to average 94.17 mb/d.

World Oil Supply
Non-OPEC oil supply growth in 2015 now stands at 1.23 mb/d, following an upward revision of 0.23 mb/d. The increase has been due to better-than-expected growth in the US, Canada, Russia and Norway. In 2016, non-OPEC oil supply is now projected to .contract by 0.66 mb/d, following a downward adjustment of 0.27 mb/d. The revision has been due to stronger declines expected in the US and Canada caused by the lower price environment. OPEC NGLs are seen growing by 0.17 mb/d in 2016, following an increase of 0.15 mb/d last year. In December, OPEC crude production decreased by 0.21 mb/d to average 32.18 mb/d, according to secondary sources.

Product Markets and Refining Operations
Product markets in the Atlantic Basin weakened in December. The mild winter weather caused a sharp drop in the middle distillates crack spreads, which hit levels not seen since 2009, outweighing unseasonably strong gasoline demand. Asian margins remained relatively healthy on the back of stronger naphtha and gasoline demand.

Tanker Market
Freight rates for dirty vessels saw mixed movements in December. On average, VLCCs freight rates increased by 30% as a result of enhanced rates for tankers operating on all reported routes. In contrast, Suezmax and Aframax rates showed declines on limited activities. Clean tanker spot freight rates were kept mostly at healthy levels compared to the previous month despite being lower on an annual basis.

Stock Movements
OECD commercial oil stocks fell in November to stand at 2,966 mb. At this level, inventories are around 267 mb higher than the five-year average. Crude and products showed surpluses of around 200 mb and 67 mb, respectively. In terms of forward cover, OECD commercial stocks stood at 63.7 days in November, some 5.8 days over the fiveyear average.

Balance of Supply and Demand
Demand for OPEC crude in 2015 is estimated at 29.9 mb/d, an increase of 0.2 mb/d over the 2014 level. In 2016, demand for OPEC crude is forecast at 31.6 mb/d, some 1.7 mb/d higher than the previous year.
Source: OPEC