The OPEC Reference Basket rose in April to its highest value this year supported by various bullish factors. The Basket increased $4.84 to $57.30/b, although remained considerably lower y-o-y. ICE Brent contract rose $4.20 to $61.14/b and Nymex WTI jumped $6.77 to $54.63/b.
World Economy
World economic growth for 2015 has been revised down to 3.3% from 3.4% previously, in line with last year’s growth. This is mainly due to the US, where growth has been revised to 2.6% from 2.9%, following sluggish growth in 1Q15. Euro-zone and Japan remain unchanged at 1.3% and 0.8%, respectively. In the emerging markets, China has been revised to 6.9% from 7.0% and Brazil to -0.4% from 0.2%. Russia and India remain unchanged at -3.2% and 7.5%, respectively.
World Oil Demand
World oil demand in 2015 is now projected to rise at a slightly higher 1.18 mb/d, compared to growth of 0.96 mb/d in the previous year. The slight upward revision to the 2015 growth figure mainly reflects expectations of uptick in oil requirements in the OECD America.
World Oil Supply
Non-OPEC oil supply growth in 2015 is expected to grow by 0.68 mb/d, compared to an increase of 2.17 mb/d in the previous year. OPEC NGLs are expected to grow by 0.19 mb/d in 2015, following growth of 0.18 mb/d last year. In April, OPEC crude oil production increased by a marginal 18 tb/d to average 30.84 mb/d, according to secondary sources.
Product Markets and Refining
Operations
Product markets in the Atlantic Basin were mixed in April. Strong gasoline demand ahead of the US driving season lent support to crack spreads at the top of the barrel; however, middle distillates were pressured by higher refinery runs in the US Gulf Coast amid increasing inflows from Europe. In Asia, margins fell due to weakening market fundamentals across the barrel, as increasing supplies outweighed strong regional demand.
Tanker Market
Dirty vessel spot freight rates dropped m-o-m as a result of limited tonnage demand mainly in the Suezmax and Aframax markets, while VLCC rates rose 17% compared to the previous month. Both OPEC and global spot fixtures declined by 4.2% and 2.9%, respectively, on the back of lower fixtures for eastern and western destinations. In April, OPEC spot fixtures averaged 11.13 mb/d and OPEC sailings averaged 23.35 mb/d.
Stock Movements
OECD commercial oil stocks rose by 16.0 mb in March to stand at 2,745 mb. At this level, inventories were 98 mb higher than the five-year average. Crude saw a surplus of 99 mb, while product stocks remained almost in line with the five-year average. In terms of days of forward cover, OECD commercial stocks stood at 61.0 days, 2.8 days higher than the fiveyear average.
Balance of Supply and Demand
Demand for OPEC crude in 2015 is expected at 29.3 mb/d. This follows a slight upward adjustment from the previous month and represents a gain of 0.3 mb/d over the estimate for 2014 of 29.0 mb/d.
Source: OPEC