OPEC Monthly Report: Oil demand to rise

2014-02-13

Crude Oil Price Movements

The OPEC Reference Basket declined by almost $3 to $104.71/b in January amid bearish sentiment. ICE Brent futures dropped 3.2% to $107.11/b following a 2.5% gain a month earlier. Nymex WTI also lost 3% to average $94.86/b, following a steep gain of more than 4% in December. The Brent-WTI spread narrowed slightly to $12.25/b.

World Economy

World economic growth for 2013 and 2014 remains at 2.9% and 3.5%, respectively. The 2014 forecast for the OECD has been revised up by 0.1 percentage points (pp) to 2.0%, compared to 1.2% in 2013. In contrast, China’s growth for 2014 has been revised down by 0.1 pp to the 2013 growth level of 7.7%, while India’s 2014 forecast remains at 5.6% and at 4.7% for 2013. The recent trend confirms the acceleration in economic growth in the OECD, compared to a slowdown in emerging economies.

World Oil Demand

World oil demand growth for 2013 was revised up by 30 tb/d to stand at 1.0 mb/d, mainly based on upward revisions for OECD Americas and Europe. For 2014, world oil demand growth is expected to increase to around 1.1 mb/d, revised up by 50 tb/d from the previous month.

World Oil Supply

Non-OPEC oil supply growth in 2013 is estimated at 1.28 mb/d and is expected to increase slightly to stand at 1.29 mb/d in 2014, with growth mainly in the US, Canada, and Brazil, while Norway, UK and Mexico are seen declining. OPEC NGLs are expected to increase by 0.15 mb/d in 2014. In January, OPEC crude production according to secondary sources averaged 29.71 mb/d, up 28 tb/d from a month ago.

Product Markets and Refining Operations

Product markets in the US strengthened in January, supported by severe winter weather causing a spike in heating fuel demand and port operational problems affecting supply. Meanwhile, European margins remained impacted by low domestic demand and lack of export opportunities, while in Asia, refinery margins continued to recover on stronger seasonal demand, mainly from the petrochemical sector.

Tanker Market

In January, dirty spot freight rates continued rising on average by 27% from last month, with Suezmax and Aframax rates increasing, while VLCC freight rates dropped. This came on the back of weather delays and tight vessels’ supply. Clean tanker spot freight rates decreased, except for tankers trading on the NW Europe-to-US route.

Stock Movements

OECD commercial stocks fell in December, driven by the decline in both crude and products. Crude showed a surplus of 41 mb over the five-year average, while products indicated a deficit of 110 mb. OECD commercial stocks stood at 56.7 days of forward cover. Preliminary data for January indicated a drop in US commercial stocks, predominantly in products, driven mainly by rising demand for heating oil.

Balance of Supply and Demand

Demand for OPEC crude remained unchanged from the previous report at 29.9 mb/d in 2013, a decrease of 0.5 mb/d from the previous year. In 2014, required OPEC crude is forecast at 29.6 mb/d, also unchanged, and down by 0.3 mb/d from a year earlier.

Source from : OPEC

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