OPEC: JULY 2014
OPEC published Monthly Oil Market Report July 2014.
Oil market highlights
Crude Oil Price Movements
The OPEC Reference Basket increased by $2.45 in June to reach $107.89/b. Nymex WTI gained $3.35 to $105.15/b and ICE Brent added $2.73 to $111.97/b. Speculator net long positions on ICE Brent hit a record high on turmoil in Iraq. The Brent/WTI spread closed the month below $7/b, after having widened to near $10/b mid-month.
World economic growth for 2014 has been revised to 3.1% from 3.4%, triggered by unexpected low 1Q14 growth in the US. The 2015 growth forecast stands at 3.4%, supported by the accelerating pace of OECD growth from 1.7% this year to 2.0% in 2015. China's GDP is forecast to grow by 7.2% in 2015 from 7.4% in the current year. India is seen growing at 5.8% next year, up from 5.5% in 2014.
World Oil Demand
Global oil demand growth in 2014 is forecast at 1.13 mb/d, broadly unchanged from the previous report. World oil demand in 2015 is anticipated to increase at a faster pace of 1.21 mb/d. OECD demand is expected to see positive growth for the first time since 2010, increasing around 40 tb/d, while non-OECD consumption is expected to provide the bulk of oil demand growth with 1.18 mb/d.
World Oil Supply
Non-OPEC oil supply is expected to increase by 1.47 mb/d in 2014, following a slight upward revision from the previous report. In 2015, non-OPEC supply is projected to grow at a slower pace of 1.31 mb/d. OPEC NGLs and non-conventional liquids are forecast to grow by 200 tb/d in 2015 to average 6.0 mb/d, after growth of 150 tb/d this year. In June 2014, OPEC crude oil production, according to secondary sources, declined by 79 tb/d to average 29.70 mb/d.
Product Markets and Refining Operations
Strong summer gasoline demand in the US has supported product markets in the Atlantic Basin. This has outweighed the considerable decline seen in the middle and bottom of the barrel, preventing refinery margins from falling in the US and Europe. In Asia, product markets have continued to lose ground, as weak demand amid the return of refineries from maintenance has caused refinery margins to fall sharply.
Tanker market spot freight rates saw mixed movement in June. VLCC and Suezmax rates increased on the back of higher activity in several regions, while the tonnage list appeared shorter. In contrast, Aframax spot freight rates declined slightly, as a result of limited activities, while tonnage availability remained in surplus.
OECD commercial stocks rose by 32 mb in May, but remained 53 mb below the five-year average. Crude stocks were 12 mb above the five-year average, while product inventories were 65 mb below. In terms of forward cover, OECD commercial stocks stood at a comfortable level of 57.7 days. Preliminary data for June shows that US total commercial oil stocks rose by 17.0 mb to stand 9 mb above the five-year average. Crude stocks were 19 mb above the five-year average, while products were 9 mb below.
Balance of Supply and Demand
Demand for OPEC crude in 2014 remains unchanged from the previous report at 29.7 mb/d. Based on initial forecasts, demand for OPEC crude in 2015 is projected to average 29.4 mb/d, representing a decline by 0.3 mb/d.
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GAZPROM - The parties discussed relevant issues related to bilateral cooperation, including the Baltic LNG project. Emphasis was placed on the priority measures aimed at developing a joint design concept (pre-FEED).
BHGE - U.S. Rig Count is up 11 rigs from last week to 1,063, with oil rigs up 8 to 869, gas rigs up 4 to 193, and miscellaneous rigs down 1 to 1. Canada Rig Count is up 13 rigs from last week to 195, with oil rigs up 8 to 127 and gas rigs up 5 to 68.
REUTERS - Brent crude futures had risen $1.02 cents, or 1.3 percent, to $81.28 a barrel by 0637 GMT. The contract dropped 3.4 percent on Thursday following sharp falls in equity markets and indications that supply concerns have been overblown. U.S. West Texas Intermediate (WTI) crude futures were up 80 cents, or 1.1 percent, at $71.77 a barrel, after a 3 percent fall in the previous session. WTI is on track for a 3.5 percent drop this week.
EIA - Brent crude oil spot prices averaged $79 per barrel (b) in September, up $6/b from August. EIA expects Brent spot prices will average $74/b in 2018 and $75/b in 2019. EIA expects West Texas Intermediate (WTI) crude oil prices will average about $6/b lower than Brent prices in 2018 and in 2019.