OPEC Monthly Oil Market Report – July 2015
The OPEC Reference Basket averaged $60.21/b in June, representing a decline of $1.95. Crude oil futures prices saw mixed movement with ICE Brent falling by $1.86 to average $63.75/b, while Nymex WTI gained 46¢ to reach $59.83/b. This caused the Brent-WTI spread to narrow to around $3.90/b for the month. Money managers further reduced net-long positions in the futures markets.
World economic growth for 2016 is forecast at 3.5%, slightly higher than this year’s growth of 3.2%. The OECD economies are expected to expand by 2.1% in 2016, compared to 2.0% in the current year.
China is expected to decelerate to 6.5% from 6.9% in 2015, while India is forecast to reach higher growth at 7.7% in 2016, compared to 7.5% this year.
Positively, both Russia and Brazil are forecast to move out of recession. Risks to the global economic growth forecast appear to be slightly on the downside.
World oil demand in 2015 is now expected to grow by 1.28 mb/d, following an upward revision of 0.10 mb/d since the last report. In 2016 world oil demand growth is forecast to pick up, reaching 1.34 mb/d. OECD demand is expected to register positive growth of 0.18 mb/d, while non-OECD consumption is projected to grow by 1.16 mb/d.
World Oil Supply; Non-OPEC oil supply growth in 2015 has been revised up by 0.18 mb/d to stand at 0.86 mb/d, mainly driven by OECD Americas, Latin America and the FSU. In 2016, non-OPEC oil supply is projected to grow by 0.30 mb/d to average 57.69 mb/d. OPEC NGLs are expected to grow by 0.17 mb/d in 2016, down from 0.19 mb/d in the current year. In June, OPEC production increased by 283 tb/d to average 31.38 mb/d, according to secondary sources.
Product Markets and Refining Operations; Product markets in the Atlantic Basin were mixed in June. The US driving season pushed up gasoline demand to around 9.5 mb/d, a level not seen in years, providing support to the gasoline crack spreads. This partially offset the weakness in the middle of the barrel, allowing refinery margins to remain healthy in the region. Asian margins retained the strength seen in the previous month as regional demand amid a heavy maintenance season continued lending support to the Asian market.
Tanker Market ;Average spot freight rates for dirty tankers went up by 12% in June, mainly as Aframax spot freight rates increased from the previous month. Aframax rates were supported by an active market and discharge delays at several ports. Clean tanker spot freight rates increased in both East and West of Suez as the tonnage demand remains high. Stock Movements OECD commercial oil stocks continued to rise in May to stand at 2,833 mb, some 142 mb higher than the five-year average, with crude and products indicating a surplus of around 115 mb and 26 mb, respectively. In terms of days of forward cover, OECD commercial stocks stand at 61.8 days in May, some 3.7 days higher than the five-year average.
Balance of Supply and Demand, for OPEC crude is estimated at 29.2 mb/d in 2015, a decline of 0.1 mb from the previous assessment and representing a gain of 0.2 mb/d over the previous year. In 2016, demand for OPEC crude is projected at 30.1 mb/d, up by 0.9 mb/d over the estimated level for the current year.
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