OPEC’s April Monthly Oil Report highlights

The Organisation of the Petroleum Exporting Countries (OPEC) has released it’s monthly oil report for April 2016. Highlights from the report include:

Crude oil price movements

The OPEC Reference Basket increased by more than 20% to reach US$34.65/bbl in March. ICE Brent ended up US$6.26 at US$39.79/b and Nymex WTI surged by US$7.34 to US$37.96/bbl. Speculators have amassed a near record number of bets on increasing oil prices. The Brent-WTI spread narrowed considerably in March to stand at US$1.83/bbl, prompting renewed US buying interest in West African light sweet grades.

World economy

World economic growth is forecast at 3.1% in 2016, after estimated growth of 2.9% last year, both unchanged from the previous month. OECD growth in 2016 remains at 1.9%, slightly below the 2.0% seen in 2015. In the emerging economies, China and India continue to expand this year at 6.3% and 7.5%, respectively, unchanged from the previous report. Meanwhile, Brazil is forecast to move further into recession this year, contracting by 2.9%, while the contraction in Russia’s economy is unchanged at 1.1%.

World oil demand

World oil demand is expected to grow by 1.54 million bpd in 2015, unchanged from the previous report, to average 92.98 million bpd. For 2016, global oil demand growth is anticipated to be around 1.20 million bpd, representing a minor downward revision of 50 tbpd from previous expectations, mainly reflecting the slower economic momentum in Latin America. Total consumption is projected to reach 94.18 million bpd in 2016.

World oil supply

Non-OPEC supply growth in 2015 has been revised up slightly to stand at 1.46 million bpd to average 57.13 million bpd. In 2016, the expected contraction in non-OPEC oil supply will be slightly more than forecast, with output falling by 0.73 million bpd to average 56.39 million bpd. OPEC NGL production is expected to grow by 0.17 million bpd in 2016, up from 0.15 million bpd last year, unchanged from the previous report. In March, OPEC crude production increased by15 tbpd to average 32.25 million bpd, according to secondary sources.

Product markets and refining operations

Product markets in the US were supported by strong domestic gasoline demand fueled by the switch to summer grade gasoline, which allowed refinery margins to remain healthy. In Europe, the lack of export opportunities in gasoline and fuel oil amid weakness in middle distillates caused margins to continue to fall. Meanwhile, refinery margins in Asia exhibited a slight recovery on the back of stronger regional demand and tightening sentiment due torefinery maintenance in the region.

Tanker market

Average dirty tanker freight rates in March rose by 5% compared to the previous month, mainly as VLCC freight rates increased in March supported by loading delays and ullage problems in the eastern ports. Clean tanker freight rates improved East of Suez butencountered a decline West of Suez impacted by limited tonnage demand. Global chartering activities were higher in March, while arrivals increased in European and far eastern ports.

Stock movements

OECD commercial oil stocks fell in February to stand at 3.026 billion bbls. At this level, OECD commercial oil stocks are around 351.8 million bbls above the latest five year average, with crude and products indicating a surplus of 240.7 million bbls and 111.1 million bbls, respectively. In terms of days of forward cover, OECD commercial stocks stood at 66.4 days, some 7.4 days higher thanthe latest five year average.

Balance of supply and demand

Demand for OPEC crude in 2015 is estimated at 29.7 million bpd, unchanged from the previous month and 0.1 million bpd lower than the year before. In 2016, demand for OPEC crude isprojected at 31.5 million bpd, broadly unchanged from the previous report and 1.8 million bpd higher than last year.

The full report can be read online here.

Written by Francesca Brindle

Read the article online at: https://www.hydrocarbonengineering.com/refining/13042016/opec-releases-monthly-oil-report-april-2016-3028/