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OPEC bulletin 8–9/17

M a r k e t R e v i e w

MOMR … oil market highlights

September 2017

The

OPEC Reference Basket

rose for the

second-consecutive month in August to

average $49.60/b, representing a gain of

$2.67/b or six per cent. Year-to-date, the

Basket was 30.9 per cent higher at $49.73/b.

Crude futures prices also saw gains with ICE

Brent increasing 5.5 per cent to $51.87/b and

NYMEX WTI up 3.0 per cent at $48.06/b.

Year-to-date, crude futures prices weremore

than 20 per cent higher. During the week of

August 29 money managers cut WTI futures

and options net long positions by 105,671

contracts to 147,303 lots, the US Commodity

Futures Trading Commission (CFTC) said.

Money managers slightly reduced Brent

futures and options net length contracts by

1,296 to 416,551 lots during the same week.

World economic growth

has been revised

up for 2017 to 3.5 per cent from 3.4 per cent,

while the growth forecast for 2018 remains

unchanged at 3.4 per cent. OECD growth has

performedbetter-than-anticipated in the cur-

rent year — particularly the Euro-zone and to

some extent in the US — and is now forecast

to grow by 2.2 per cent in 2017 and 2.0 per

cent in 2018. India is expected to grow by

6.9 per cent in 2017 and 7.5 per cent in 2018.

Brazil and Russia are both forecast to expand

their recovery to0.5 per cent and 1.5 per cent

in 2017, respectively, followed by growth of

1.5 per cent and 1.4 per cent in 2018. China

is expected to grow by 6.7 per cent in 2017

and 6.3 per cent in 2018.

World oil demand

growth in 2017 is

expected to rise by 1.42mb/d after an upward

revision of around 50,000 b/d. The adjust-

ment mainly reflects better-than-expected

data fromOECD region for the 2Q17, particu-

larly OECD Americans and Europe, as well as

China. In 2018, world oil demand is antici-

pated to grow by 1.35m b/d, an increase of

70,000 b/d from the previous report. This

reflects higher growth expectations for OECD

Europe and China.

Non-OPEC

oil supply

is expected to grow

by 780,000 b/d in 2017, unchanged from

the last month due to offsetting revisions

in Kazakhstan and US supply. In 2018, non-

OPEC oil supply is forecast to grow by 1.0m

b/d, following a downward revision to Russia

andKazakhstan, totalling 100,000b/d. OPEC

NGLs and non-conventional liquids produc-

tion are seen averaging 6.49m b/d in 2018,

representing an increase of 180,000 b/d,

broadly in line with growth in the current

year. In August, OPEC crude oil production

decreased by 79,000 b/d, according to sec-

ondary sources, to average 32.76m b/d.

Refinery margins

in the Atlantic Basin

strengthened in August. In the US, mar-

gins rose amid expectations for a product

supply shortfall in the wake of Hurricane

Harvey, coupled with already firm domes-

tic demand, which supported product crack

spreads. In Europe and Asia, product markets

were supported by supply outages in the US,

which encouraged higher arbitrage volumes,

as well as healthy seasonal demand, which

helped lift refinery margins.

Average

spot freight rates

in August fol-

lowed the typical trend seen in the summer

months, with a weakening on most reported

routes. Dirty spot freight rates fell, influenced

by high vessel availability, as new deliveries

were reportedly added to the fleet, putting

pressure on an already oversupplied tonnage

market. Clean tanker rates declined on aver-

age, influenced by lower rates registered on

the West of Suez, despite a temporary hike

in rates in the US due to Hurricane Harvey.

Total

OECD commercial oil stocks

fell in

July to stand at 3,002m b. At this level, OECD

commercial oil stockswere 195mb above the

latest five-year average. Crude and products

stocks indicate surpluses of around 123m b

and 72m b, respectively, above the seasonal

norm. In terms of days of forward cover,

OECD commercial stocks stood at 62.9 days

in July, some 2.7 days higher than the latest

five-year average.

Based on the current global oil supply/

demand balance,

OPEC crude

in 2017 is

estimated at 32.7mb/d, around 500,000b/d

higher than in 2016. Similarly, OPEC crude

in 2018 is estimated at 32.8m b/d, about

200,000 b/d higher than in 2017.

The feature article and oil market highlights are taken from OPEC’s Monthly Oil Market Report (MOMR) for September 2017. Published

by the Secretariat’s Petroleum Studies Department, the publication may be downloaded in PDF format from our Website

(www.opec.org

),

provided OPEC is credited as the source for any usage. The additional graphs and tables on the following pages reflect the latest data on

OPEC Reference Basket and crude and oil product prices in general.