Monthly Oil Market Report
Oil Market Highlights
OPEC Reference Basket
decreased in the first week of October to below the $100 mark.However, by mid-month, it had reversed course following developments in equity markets on hopesfor a solution to the European debt crisis and supportive economic data in the US and China. Inmonthly terms, the OPEC Reference Basket averaged $106.32/b, representing a decline of $5.30.On the crude oil futures market, the Nymex WTI front-month contract rose 82¢ to average $86.43/bin October, while ICE Brent lost $1.12 to average $108.79/b. On 8 November, the OPEC ReferenceBasket stood at $113.79/b.
The forecast for
world economic growth
in 2011 remains unchanged at 3.6%, while the forecastfor global growth in 2012 has been revised down from 3.7% to 3.6%. US growth remains unchangedat 1.6% for 2011 and 1.8% for 2012. While growth expectations in the Euro-zone remain at 1.6% forthis year, the forecast for next year has been revised down to 0.7% from 0.8% previously. Similarly,while the forecast for Japan for this year remains unchanged at minus 0.8%, the forecast for 2012has been revised down to 2.2% from 2.4% previously. Growth levels in the developing countriesremain high. China remains unchanged at 9.0% for 2011 and 8.5% for 2012. India is forecast to seegrowth of 7.6% in both 2011 and 2012, in line with the previous report.
World oil demand growth
in 2011 is forecast at 0.9 mb/d, unchanged from the previous report.Despite the emerging winter season, OECD oil demand is expected to see a further contraction as aresult of slowing economic momentum, particularly in the EU. Moreover, US gasoline demand hasbeen on the decline for the past four months reflecting the sluggish economy. The forecast for globaloil demand growth in 2012 also remains unchanged at 1.2 mb/d. However, uncertainties in the worldeconomic outlook for the coming year have increased due to the challenges facing the OECDeconomies.
in 2011 is forecast to increase by 0.2 mb/d, representing a downward revision ofaround 140 tb/d from the previous report. In 2012, non-OPEC supply is forecast to grow by0.8 mb/d, in line with the previous assessment. Brazil, Canada, Colombia, the US, Ghana, andRussia are expected to be the main contributors to next year’s growth, while Norway, UK, andMexico are anticipated to experience the largest declines. OPEC NGLs and non-conventional oilsare estimated to average 5.7 mb/d in 2012, indicating growth of 360 tb/d over the current year. InOctober, OPEC production averaged 29.89 mb/d, a minor increase over the previous month.
showed mix performance in October. Light distillates continued to lose grounddue to weak naphtha demand in the petrochemical industry and gasoline consumption remainedbelow year-ago levels. This was offset by a vibrant recovery in middle distillates and fuel oil acrossthe globe, on the back of strong demand and a tighter market which kept margins on the healthyside. In the US, weekly data showed middle distillate demand reaching a two-year high of more than4 mb/d. Looking ahead, with the start of the winter season, middle distillate demand is expected tocontinue to support product markets.
OPEC spot fixtures
increased by 5% in October to average 11.8 mb/d on the back of increasedAsian demand for Middle East crudes. OPEC sailings were nearly steady in October at 22.5 mb/d, aminor decrease from the previous month. Crude oil spot freight rates registered strong growthbacked by Suezmax and Aframax as result of seasonal demand and delays in the Bosporus. Westof Suez activities were behind the increase in clean spot freight rates, while East of Suez ratesremained weak.
US commercial oil
inventories fell for the second consecutive month in October, down 9.8 mb. Thedrop was attributed solely to product stocks which fell 13.1 mb, while crude inventories rose 3.2 mb.Despite the draw, US commercial stocks remain broadly in line with the five-year average. In Japan,the most recent monthly data for September shows that commercial oil inventories rose by 6.9 mb,driven by a build in crude and products which increased by 2.4 mb and 4.5 mb respectively.Commercial inventories in Japan stood slightly below their seasonal norm.
Demand for OPEC crude
in 2011 has been revised up by 0.1 mb/d from the previous assessmentto stand at 30.0 mb/d. At this level, the demand for OPEC crude is 0.3 mb/d above the previousyear. In 2012, demand for OPEC crude is projected to average 30.0 mb/d, about 0.1 mb/d higherthan in the previous report and unchanged from the current year.