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Crude Oil Price Movements

OPEC Monthly Oil Market Report – November 2017

7

In the

USGC

, the LLS premium over medium sour Mars increased by 37¢ to $3.11/b, despite limited sour

crude imports. Meanwhile, USGC crude price differentials to WTI rose sharply after Brent's premium

widened over WTI, with sour grades such as Mars trading at a premium to WTI. Strong export demand from

Asia was also a driving factor to the increase in certain USGC grades. In addition, US cash crude

differentials broadly rose as Gulf Coast refiners restarted key units at facilities to process the feedstock into

products.

Impact of US dollar and inflation on oil prices

On average, the

US dollar (USD) advanced against both major currency counterparts and the

currencies of emerging markets

. This upward trend started mid-September, as concerns about the impact

of Hurricane Harvey and Irma on the US economy receded, while geopolitical concerns surrounding the

Korean Peninsula also diminished. Meanwhile, amid further strengthening of the labour market, confirmation

of a strong performance of the US economy in 3Q17, and a potential boost related to the tax reform package

currently discussed in US Congress, market expectations for an interest rate hike by the US Federal Reserve

in the upcoming December meeting have increased considerably, giving further support to the US dollar.

On average the dollar increased by 1.4% m-o-m against the euro, also weakened by the extension of the QE

programme by the European Central Bank and the on-going push for independence in Cataluña. Against the

Swiss franc, the dollar increased on average by 2.0%. Against the Canadian counterpart, it increased sharply

by 2.7%, reversing the previous month’s gain. The dollar gained 0.9% m-o-m against the pound sterling

while against the Japanese yen, the dollar advanced by 2.0% m-o-m, also partly on the expectation of further

monetary stimulus after the victory of the prime minister’s coalition.

On average, the US dollar increased by 0.8%

against the Chinese yuan in October. The dollar

advanced by 1.0% m-o-m against the Indian rupee,

but part of the gain was limited by the decision of

the Reserve Bank of India to leave rates

unchanged.

Against

commodity

exporters’

currencies, the dollar increased by 1.8% m-o-m

against the Brazilian real, while against the Russian

ruble it was flat on average as rising petroleum

prices counterbalanced the effect of the dollar’s

overall strength. Against the Mexican peso the US

dollar jumped by 5.2% during the month, on

re-emerging concerns about a new round of NAFTA

negotiations.

In

nominal terms

, the price of the OPEC

Reference Basket (ORB) increased by $2.06, or

3.9%, from $53.44/b in September to $55.50/b in

October.

Graph 1 - 7: Impact of inflation and currency

fluctuations on the spot OPEC Reference Basket

pric

e 1

In

real terms

, after accounting for inflation and currency fluctuations, the ORB increased to $36.36/b in

October from $34.59/b (base June 2001=100) in the previous month. Over the same period, the US dollar

increased by 1.0% against the import-weighted modified Geneva I + US dollar basket

1

, while inflation

declined by 0.1%.

1

The "Modified Geneva I + US$ Basket" includes the euro, the Japanese yen, the US dollar, the pound sterling and the

Swiss franc, weighted according to merchandise imports by OPEC Member Countries from the countries in the basket.

0

20

40

60

80

100

120

Oct 13

Feb 14

Jun 14

Oct 14

Feb 15

Jun 15

Oct 15

Feb 16

Jun 16

Oct 16

Feb 17

Jun 17

Oct 17

US$/b

Nominal Reference Basket price

Real Reference Basket price

Source: OPEC Secretariat.

Base:

June 2001 = 100

$55.50/b

$36.36/b