The OPEC Reference Basket averaged $85.06/b in October, representing a decline of $10.92 from the previous month. Nymex WTI dropped $8.83 to average $84.34/b and ICE Brent shed $10.52 to average $88.05/b. The Brent-WTI spread has contracted further in October to average $3.70/b, the lowest difference in fifteen months.

World Economy
World economic growth expectations for 2014 and 2015 remain unchanged from the previous report at 3.2% and 3.6%, respectively. The OECD forecast stands at 1.8% for 2014 and 2.1% for 2015, in line with the previous report, with the US showing a continued improvement, while the Euro-zone and Japan are lagging in growth. Figures for both China and India remain unchanged from the previous report at 7.4% and 7.2% for China and 5.5% and 5.8% for India in 2014 and 2015, respectively.

World Oil Demand
The estimate for world oil demand growth in 2014 remains at 1.05 mb/d. Total oil consumption is expected to reach a peak for the year in 4Q14 resulting in total oil demand of 91.19 mb/d for 2014. For 2015, the forecast for world oil demand growth stands at 1.19 mb/d, in line with the previous report, with total world oil consumption expected to reach 92.38 mb/d.

World Oil Supply
Non-OPEC oil supply is estimated to grow by 1.68 mb/d in 2014. In 2015, non-OPEC oil supply is projected to grow by 1.24 mb/d. The US, Canada, Brazil and China are seen to be the key contributors to next year’s non-OPEC supply growth. OPEC NGLs and non-conventional liquids are estimated to average 6.03 mb/d in 2015, up from 5.83 mb/d in 2014. In October, OPEC crude oil production averaged 30.25 mb/d, according to secondary sources, a decrease of 0.23 mb/d from the slightly upwardly revised September figure of 30.48 mb/d.

Product Markets and Refining Operations
Light distillate crack spreads narrowed in the Atlantic Basin with the return of several disrupted fluid catalytic cracking (FCC) units, mainly in the US Gulf Coast. Losses at the top of the barrel resulted in a decline in refinery margins despite a balanced middle distillates market. In contrast, the Asian market lost some ground in October due to lower crack spreads.

Tanker Market
Spot freight rates for dirty vessels saw increases across various classes with Suezmax rates showing the strongest gains. VLCC, Suezmax and Aframax spot freight rates rose by 15%, 19%, and 17%, respectively, over the previous month. Freight rate gains were mainly driven by seasonal demand, Asian requirements and increased port delays.

Stock Movements
OECD commercial oil stocks rose by 21.2 mb in September to stand at 2,719 mb. At this level, commercial oil stocks were still 8.1 mb below the latest five-year average. Crude stocks showed a surplus of around 18 mb, while product inventories remained roughly 26 mb below the five-year average. In terms of days of forward cover, OECD commercial oil stocks rose 0.1 days over the previous month to stand at 58.7 days in September.

Balance of Supply and Demand
Demand for OPEC crude is estimated at 29.5 mb/d in 2014. In 2015, required OPEC crude is seen averaging 29.2 mb/d.
Source: OPEC