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Crude Oil Price Movements

OPEC Monthly Oil Market Report – September 2017

3

ORB component values

improved along with relevant crude oil benchmarks and monthly changes in

respective official selling price (OSP) differentials. Crude oil physical benchmarks, namely Dated Brent,

Dubai and WTI spot prices, increased in August by $3.15/b, $2.65/b and $1.36/b, respectively.

Continuing improvements in price differentials, coupled with an uplift in crude benchmark Brent outright

prices, supported light sweet crude Basket components from West and North Africa to prices above $50/b.

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

increased by $3.32/b on average, or 6.9%, to $51.33/b. Physical crude differentials for these grades

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

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

OPEC production adjustments and geopolitical turbulence.

Tropical Storm Harvey caused in a shortage of refined products in the US, which also supported margins and

increased demand for West African gasoline- and distillate-rich crudes. At least 3.6 mb/d of refining capacity

was offline in Texas and Louisiana, or nearly 20% of total US capacity. Restarting plants even under the best

conditions can take a week or more. As a result of the outages, major pipelines carrying gasoline, diesel and

jet fuel started to adjusted deliveries or closed lines outright because of a lack of supply.

Latin American ORB components Venezuelan Merey and Ecuador’s Oriente edged up to $45.38/b and

$47.45/b, respectively. They gained $1.97, or 4.5%, and $2.24, or 5.0%, respectively. Tight sour crude

supplies in the USGC and high exports supported these grades.

Buoyed again by an uplift in OSP offsets and supported by healthy global sour markets, the value of multiple-

region destination grades Arab Light, Basrah Light, Iran Heavy and Kuwait Export improved further.

On average, these grade’s values expanded by $2.64 in August, or 5.7% to $49.07/b. Middle Eastern spot

components Murban and Qatar Marine saw their values improve by $2.49, or 5.1%, to $51.51/b and $2.26,

or 4.8%, to $49.71/b, respectively. The grades were underpinned by firm demand from Asia in general, but

most noticeably from Taiwan and India.

On 11 September, the

ORB

stood at $51.82/b, over $2.22 above the August average.

The oil futures market

Oil futures

rose further in August, with ICE Brent gaining 5.5% and averaging above the $50/b mark,

supported greatly by a decline in US crude oil stockpiles, somewhat lower supplies and healthy refined

product market sentiments. Crude futures prices climbed earlier in the month on US dollar weakness and

momentum toward oil market rebalancing. Geopolitical developments also supported gains to two-month

highs. Prices advanced further with surging US fuel demand and strong refinery runs. US gasoline demand

was at 9.842 mb/d for the week ending 28 July, the highest on record. Before the end of first decade of the

month, crude oil futures prices continued increase further after a strong US jobs report bolstered hopes for

growing energy demand. Subsequently, oil prices started to fall amid concerns over global oversupply of

crude. During the same week, the biggest weekly draw in US crude stocks since September 2016 could not

prevent a slide in oil futures, as a surprise build in gasoline inventories and a continuing rise in US output

dictated market reaction. Before long, prices rebounded sharply as the dollar fell, US drillers cut rigs and

refined product futures led the oil complex higher after Energy Information Administration (EIA) data showed

a gasoline stock draw, while traders continued to track a potential hurricane in the Gulf of Mexico. However,

gains were limited amid the reopening of Libya's largest oil field.

By the end of the month, prices fell again as Hurricane Harvey threatened oil operations along the energy

hub on the USGC. US gasoline futures temporarily spiked as severe flooding disrupted refineries and energy

infrastructure. In contrast, crude prices dipped on expectations for reduced refinery demand. However, prices

normalized quickly with the return to the market of disrupted facilities.

ICE Brent ended August $2.72, or 5.5% higher, to stand at $51.87/b on a monthly average basis, while the

NYMEX WTI increased by $1.38, or 3.0%, to $48.06/b. Y-t-d, ICE Brent is $9.49, or 22.2% higher at

$52.14/b, while the NYMEX WTI rose by $8.24, or 20.1%, to $49.30/b.

Crude oil futures prices improved in the second week of September. On 11 September,

ICE Brent

stood at

$53.84/b and

NYMEX WTI

at $48.07/b.