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Crude Oil Price Movements

2

OPEC Monthly Oil Market Report – October 2017

In addition to seasonal refined products demand, unplanned refinery shutdowns in Europe and the USGC

have helped refining margins globally. Oil field maintenance as well as the ongoing lower supply of sour

crudes, particularly in Asia and Europe, due to the OPEC and non-OPEC production adjustment, has

underpinned physical crude oil values. Oil price gains have also been supported by anticipated demand from

US refiners resuming operations after shutdowns due to Hurricane Harvey.

Nevertheless, the market was also under pressure from a build in US oil inventories resulting from lower

refinery runs on the USGC due to the shutdown of several refineries when Hurricane Harvey hit.

M-o-m, the

ORB value

rose $3.84, or 7.7%, to

settle at $53.44/b on a monthly average basis. For

3Q17, the ORB was 3.1%, or $1.50, higher at

$49.98/b. Compared to the previous year, the ORB

value was 30.1%, or $11.59, higher at $50.13/b.

ORB component values

improved along with

relevant crude oil benchmarks and monthly

changes in their respective OSP differentials.

A healthy physical market, particularly in the

North Sea, also supported ORB components linked

to Brent. Crude oil physical benchmarks, namely

Dated Brent, Dubai and WTI spot prices, increased

by $4.41/b, $3.27/b and $1.68/b, respectively.

The uplift in the Brent crude benchmark along with

elevated price differentials supported light sweet

crude

Basket components from West and North

Africa

, boosting prices sizably to above $55/b.

Graph 1 - 1: Crude oil price movement

Saharan Blend, Es Sider, Girassol, Bonny Light, Equatorial Guinea’s Zafiro and Gabon’s Rabi values

increased by $4.74 on average, or 9.2%, to $56.07/b. Physical crude price differentials for these grades

remain high, on higher demand from Asia, particularly China and India. Booming refinery profits are helping

West African oil producers to sell cargoes at higher values, aided by a shortage in certain types of crude

amid the OPEC and non-OPEC producing countries’ voluntary production adjustments and geopolitical

disturbances. Nevertheless, sales from storage, spurred on by a flat forward structure in Brent prices,

capped West African crude price differentials.

Latin American ORB components

Venezuelan Merey and Ecuador’s Oriente edged up to $49.13/b and

$51.30/b, gaining $3.75, or 8.3%, and $3.85, or 8.1%, respectively. Tight sour crude supplies in the USGC

and high exports continue to support these grades, despite the shutdown of several heavy conversion

refineries on the USGC.

Buoyed again by the uplift in OSP offsets and support from healthy Asian demand as they prepared to ramp

up heating oil production for peak winter demand in the northern hemisphere, the value of

multiple-region

destination grades

Arab Light, Basrah Light, Iran Heavy and Kuwait Export improved further. On average,

these grade values expanded by $3.63 for the month, or 7.4%, to $52.71/b.

Middle Eastern spot components

, Murban and Qatar Marine, saw their values improve by $3.43, or 6.7%,

to $54.94/b and $3.20, or 6.4%, to $52.91/b, respectively. Spot premiums for Middle East crude for year-end

loading have hit multi-month highs, spurred on by robust demand in Asia. Asian buyers snapped up spot

cargoes this month after Saudi Aramco and the Abu Dhabi National Oil Company lowered supplies and as

they both prepared to ramp up heating oil production for peak winter demand.

On 10 October, the ORB stood at $54.23/b, 79ȼ above the September average.

35

40

45

50

55

60

65

35

40

45

50

55

60

65

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Oct 17

US$/b

US$/b

OPEC Basket

WTI

Brent Dated

Sources: Argus Media, OPEC Secretariat and Platts.