WORLD OIL DEMAND GROWTH: 1.05 MB/D
Oil market highlights
Crude Oil Price Movements
The OPEC Reference Basket fell by $4.86 in August to stand at $100.75/b. Nymex WTI declined by $6.32 to $96.08/b and ICE Brent dropped $4.79 to $103.40/b. Speculators sharply cut net long positions amid ample supply and low demand. The Brent-WTI spread widened to around $7.30/b as stock draws at Cushing, Oklahoma, have finally stalled.
World economic growth for 2014 and 2015 remains unchanged at 3.1% and 3.4% respectively. A better-than-expected US GDP in 2Q14 was offset by on-going challenges in the Euro-zone and a large decline in 2Q14 GDP growth in Japan. This kept the OECD GDP growth forecast at 1.8% in 2014 and 2.0% in 2015. Expectations for China and India remain unchanged, with China growing at 7.4% and 7.2%, and India at 5.5% and 5.8%. Brazil has been revised down to 0.7% in 2014 and 1.4% in 2015, and Russia's GDP growth forecast has also been lowered to 0.3% in 2014 and 1.1% in 2015.
World Oil Demand
World oil demand growth in 2014 is expected to reach 1.05 mb/d, following a downward revision of around 50 tb/d, mainly due to the weaker-than-expected performance of the OECD region. In 2015, world oil demand is forecast to increase by 1.19 mb/d, representing a marginal downward adjustment, as an upward revision in the non-OECD region was offset by slower OECD growth.
World Oil Supply
Non-OPEC oil supply growth is expected to increase by 1.68 mb/d in 2014, following an upward revision of 180 tb/d from last month. In 2015, non-OPEC oil supply is projected to grow by 1.24 mb/d, representing a downward adjustment of 30 tb/d from the previous forecast. OPEC NGLs and non-conventional liquids are forecast to grow by 0.2 mb/d in 2015 to average 6.03 mb/d. In August, OPEC crude oil production according to secondary sources increased by 231 tb/d to average 30.35 mb/d.
Product Markets and Refining Operations
Product markets in the Atlantic Basin saw support from strong US gasoline demand amid a tightening sentiment due to falling inventories. Steady middle distillate demand and lower inflows into the region prevented European margins from dropping while US margins were boosted by falling WTI prices. In Asia, the weaker light distillates market caused refinery margins to continue weakening.
A general weak sentiment was seen in the dirty tanker market in August on the back of low tonnage demand and reduced activities. Clean tanker freight rates improved East of Suez but encountered a slight decline in the West. OPEC and Middle East sailings declined compared to the previous month, although arrivals in all regions were higher, except in the Far East.
OECD commercial oil inventories rose in July, but remained 37 mb below the five-year average. Crude showed a surplus of around 22 mb, while products registered a deficit of 59 mb. In terms of forward cover, OECD commercial stocks stood at 58.2 days in July. Preliminary data for August shows that US total commercial oil stocks rose by around 3.7 mb, which is around 10.0 mb above the five-year average. Crude and product stocks showed surpluses of 7.0 mb and 3.0 mb, respectively.
Balance of Supply and Demand
Demand for OPEC crude in 2014 was revised down by 0.2 mb/d from the previous month to stand at 29.5 mb/d. In 2015, required OPEC crude was also revised down by 0.2 mb/d to stand at 29.2 mb/d.
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LUKOIL - The plan is based on the conservative $50 per barrel oil price scenario. Sustainable hydrocarbon production growth is planned in the Upstream business segment along with the growth in the share of high-margin projects in the overall production. In the Downstream business segment, the focus is on the improvement of operating efficiency and selective investment projects targeted at the enhancement of product slate.
BP - BP will acquire on completion a 43% equity share in Lightsource for a total consideration of $200 million, paid over three years. The great majority of this investment will fund Lightsource’s worldwide growth pipeline. The company will be renamed Lightsource BP and BP will have two seats on the board of directors.
REUTERS - Brent crude was up 69 cents, or 1.1 percent, at $64.03 a barrel by 0743 GMT. It had settled down $1.35, or 2.1 percent, on Tuesday on a wave of profit-taking after news of a key North Sea pipeline shutdown helped send the global benchmark above $65 for the first time since mid-2015. U.S. West Texas Intermediate crude was up 45 cents, or 0.8 percent, at $57.59 a barrel.
ROSATOM - On December 10, 2017, the construction start ceremony took place at the Akkuyu NPP site under a limited construction licence issued by the Turkish Atomic Energy Agency (TAEK). Director General of the ROSATOM Alexey Likhachev, and First Deputy Minister of Energy and Mineral Resources of the Turkish Republic, Fatih Donmez, took part in the ceremony.