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June 2009
Feature Article:
Sustainability of current oil market sentiment
Oil market highlights Feature article Crude oil price movements The oil futures market Commodity markets Highlights of the world economy World oil demand World oil supply Product markets and refinery operations The tanker market Oil trade Stock movements Balance of supply and demand 135 9 1116 21 28 35 39 4352 55
OP C
Organization of the Petroleum Exporting Countries
Monthly Oil Market Report
Obere Donaustrasse 93, A-1020 Vienna, AustriaTel +43 1 21112 Fax +43 1 2164320 E-mail: prid@opec.org Web site: www.opec.org
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Monthly Oil Market Report
June 2009
1
Oil Market Highlights
The
OPEC Reference Basket
surged almost 14% to average $56.98/b in May for a gain of $6.78/b,the highest monthly average in seven months. The market was driven by improving economicsentiment lending hope for a recovery in petroleum demand. Refinery problems in the US emergedwith the start of the driving season while implied weekly demand reached a two-year high. The fall of the US dollar to a five-month low and the continued rally in equities also impacted the market. TheBasket continued to move higher in June as investment institutions forecast higher prices inspiringinflows into energy futures as the dollar weakened. The Basket reached $70.87/b on 10 June.
Growth for the
world economy
in 2009 has been revised up slightly by 0.1% to show a decline of 1.3%. This minor change was due to upward revisions mainly in China and India. Developments inthese economies have been improving lately, justifying an upward revision for the full year. China’sgrowth forecast for 2009 was increased from 6.5% to 7.0% while India was revised up from 5.0% to5.7%. The forecast for the OECD countries remains unchanged at minus 3.8% with US GDPexpected to decline by 2.8%, the Euro-zone by 4.2%, and Japan remaining very weak with anexpected contraction of 6.4%. While developing Asia has seen some positive momentum, it remainsto be seen whether the measures taken by OECD countries are able to produce a sustainable recovery.
World oil demand
is estimated to have fallen by 0.4 mb/d in 2008 following a downwardrevision of 0.1 mb/d from the previous assessment. The bulk of the revision occurred in thefourth quarter. In 2009, world oil demand is expected to see continued negative growth of 1.6 mb/d, broadly unchanged from the previous report. On a quarterly basis, the first half of theyear has seen a downward revision, while a gradual recovery in demand is expected by the end of the year. OECD is projected to fall by 1.8 mb/d, while non-OECD should see slight growth of around 0.2 mb/d.
The estimate for
non-OPEC oil supply
in 2008 remains unchanged from the previous assessment,showing a decline of 0.2 mb/d. In 2009, non-OPEC oil supply is projected to increase by 0.2 mb/dfrom the previous year, broadly unchanged from the previous assessment.
OPEC NGLs
and non-conventional oils are expected to average 4.7 mb/d in 2009, an increase of 0.4 mb/d over the previousyear. In May,
OPEC crude oil production
averaged 28.27 mb/d, an increase of 135 tb/d over theprevious month.
A combination of the gasoline stock draws in the US, lower refinery runs and product outputs haveprovided support for
product markets
, lifting refining margins especially in the Atlantic Basin.However, due to persisting bearish momentum in the distillate market and expectations that gasolinedemand over the driving season will lack sufficient strength, the recent positive developments in thegasoline markets are not expected to persist over the coming months.
OPEC spot fixtures rose in May by 21% compared to the previous month. Sailings from OPEC weremarginally higher. The
tanker market
rebounded in May with a good performance for the Aframaxsector. The VLCC sector continued to suffer the most from the global economic crisis and OPECoutput adjustments. Clean spot freight rates rose by 37% on average. After reaching a high level,storage at sea lost momentum towards the end of the month due to the narrowing of the contangostructure in the crude futures market.
US
commercial oil stocks
continued their upward trend in May rising 14.5 mb to stand at 1,102 mb.The build was due mainly to other products, as crude and gasoline stocks fell by 11 mb and 9 mbrespectively. European (EU-15 plus Norway) oil stocks rose 7 mb in May to stand at the upper end of the five-year average, the surplus attributed to products. Japan’s commercial oil stocks fell a further1.7 mb in April before gaining around 7 mb in May, according to preliminary data.
The
demand for OPEC crude
in 2008 is estimated to average 30.8 mb/d, a decline of 0.5 mb/d fromthe previous year. In 2009, the demand for OPEC crude is expected to average 28.6 mb/d, a drop of 2.2 mb/d from a year earlier.
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