Crude Oil Price Movements
The OPEC Reference Basket increased by $1.17 to stand at $105.44/b in May amid firming sentiment in the crude oil market. ICE Brent rose $1.15 to $109.24/b, while Nymex WTI slipped 24¢ to $101.79/b. The Brent-WTI spread ended the month at an average around $7.45/b, after settling at a seven-month low of $6.05/b in the previous month.

World Economy
World economic growth figures remain unchanged at 3.4% for 2014 and 2.9% in 2013. No revisions have been made in the major OECD economies. OECD growth is forecast at 2.0% in 2014. The forecasts for China and India also remain unchanged at 7.5% and 5.6%, respectively. Risks to the growth forecast have emerged recently as industrialised economies are facing some headwinds, amid slowing momentum in the emerging economies.

World Oil Demand
World oil demand is expected to increase by 1.14 mb/d in 2014, in line with the previous month’s forecast. More than half of oil demand growth this year is seen coming from China and the Middle East. Estimated world oil demand growth in 2013 was also left unchanged at 1.05 mb/d.

World Oil Supply
Non-OPEC oil supply growth in 2014 now stands at 1.44 mb/d, representing an upward revision of around 60 tb/d from the previous report. Growth is seen coming mainly from the US, Canada, and Brazil. US liquids supply in 2014 is projected to grow by 0.95 mb/d to reach 12.13 mb/d. The 2013 non-OPEC supply growth estimate was left unchanged at 1.35 mb/d. OPEC NGL production is forecast to average 5.81 mb/d in 2014. In May, OPEC crude production according to secondary sources averaged 29.76 mb/d, an increase of 142 tb/d from a month ago.

Product Markets and Refining Operations
Product markets in the Atlantic Basin received support from increasing gasoline demand with the start of the US driving season, although higher refinery runs and increasing gasoline inventories have pressured margins. The Asian market lost ground in May due to weakening middle distillates and gasoline crack spreads, which more than offset the positive performance of the bottom of the barrel.

Tanker Market
Tanker market sentiment was mixed in May, with VLCC rates dropping on all reported routes, while Suezmax and Aframax freight rates were flat from a month before. Tankers on all dirty segments suffered from low market activities, while clean spot freight rates declined by 4% on average, compared to the previous month.

Stock Movements
OECD commercial inventories rose sharply in April, but still remained 80 mb below the five-year average. Crude and products showed deficits of 16 mb and 64 mb, respectively. In terms of forward cover, OECD commercial stocks stood at 57.5 days. Preliminary data shows that US total commercial oil stocks rose by 17.5 mb in May, remaining in line with the five-year average. Crude stocks were 16 mb over the five-year average, while products were 16 mb below.

Balance of Supply and Demand
Demand for OPEC crude remained unchanged in 2013 from the previous report to stand at 30.1 mb/d, representing a decrease of 0.4 mb/d compared with the previous year. The forecast for required OPEC crude in 2014 was revised down by 0.1 mb/d to stand at 29.7 mb/d, a decline of 0.4 mb/d from the previous year.
Source: OPEC