OPEC: OIL PRICE MOVEMENTS
Oil market highlights
Crude Oil Price Movements
The OPEC Reference Basket fell $4.77 to stand at $95.98/b in September, as sluggish demand and ample supply continue to weight on the oil market. Nymex WTI slipped $3.04/b to $93.03/b in September, while ICE Brent dropped $4.83 to $98.57/b. Speculative net length in ICE Brent was down almost 85% from the peak seen in June 2014. The Brent-WTI spread narrowed to $5.54/b, the lowest since July 2013.
Expectations for world economic growth in 2014 and 2015 remain unchanged at 3.2% and 3.6% respectively, following a re-basing on 2011 purchase power parity. The OECD is seen growing at 1.8% in 2014 and 2.1% in 2015, with the US experiencing a continued acceleration, while growth in the Euro-zone and Japan remains sluggish. China's figures remain unchanged at 7.4% in 2014 and 7.2% next year. Growth in India is also unchanged at 5.5% this year and 5.8% in 2015.
World Oil Demand
Global oil demand growth in 2014 is anticipated to reach around 1.05 mb/d, unchanged from the previous report. Growth this year has been supported by positive performance of China, Brazil and Saudi Arabia, offsetting lower-than-expected growth in some OECD regions. In 2015, world oil demand is forecast to rise by 1.19 mb/d, in line with last month's forecast.
World Oil Supply
Non-OPEC oil supply growth in 2014 is forecast at 1.68 mb/d, in line with the previous report. Growth was seen coming mainly from the US, Brazil and Canada, while Mexico, Indonesia and the UK are expected to see a decline. Non-OPEC supply is expected to increase by 1.24 mb/d in 2015. OPEC NGLs is seen growing by 0.2 mb/d in 2015 to average 6.03 mb/d. In September, OPEC crude production averaged 30.47 mb/d according to secondary sources, an increase of 402 tb/d from the previous month.
Product Markets and Refining Operations
A tightening gasoline market due to several unit outages lent support to crack spreads. This partially offset weaker middle distillates demand, allowing margins to continue the upward trend in the Atlantic Basin. In Asia, strong gasoline and fuel oil demand, along with falling crude prices, allowed margins in the region to recover.
The dirty spot tanker market continued to be under pressure in September. Tankers in different segments showed lower freight rates as tonnage demand remained limited, while availability continued to see a surplus. Clean tanker freight rates improved in September driven by high market activity west of Suez.
OECD commercial oil stocks rose by around 9.0 mb in August to stand at 2,679 mb. At this level, inventories were still 57.0 mb below the five-year average. Crude saw a surplus of 12.0 mb, while product stocks remained 69 mb below the five-year average. In terms of days of forward cover, OECD commercial stocks edged 0.1 day higher in August over the previous month to stand at 57.9 days.
Balance of Supply and Demand
Demand for OPEC crude in 2014 remains unchanged from the previous report at 29.5 mb/d. In 2015, demand for OPEC crude is seen averaging 29.2 mb/d, in line with the previous expectations.
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PLATTS - Asia is a growing market for Russian energy, including LNG, and a potential source of investment for the world's largest producer of resources and minerals. The Kremlin has increasingly looked to build its presence in the Asian region following the imposition of tough sanctions by the US on Russia.
REUTERS - “The Saudis are very angry at Trump. They don’t trust him any more and feel very strongly about a cut. They had no heads-up about the waivers,” said one senior source briefed on Saudi energy policies.
PLATTS - "It is obvious that we need to cooperate with Saudi Arabia, and we are going to cooperate with Saudi Arabia. OPEC plus has been very positive, and we see that in the market situation," Putin told reporters in Singapore during a briefing broadcast on Russia 24.
U.S. OFR - The U.S. Office of Financial Research (OFR) released its 2018 Annual Report to Congress, stating that risks to U.S. financial stability remain in the medium range, reflecting a mix of high, moderate, and low risks to the financial system.