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OPEC bulletin 2/18

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

MOMR … oil market highlights

February 2018


OPEC Reference Basket (ORB)


creased for the fifth-straight month in

January, gaining a sharp 7.7 per cent to av-

erage $66.85/barrel, the highest monthly

average since November 2014. Oil prices

were supported by continuing efforts by

OPEC and participating non-OPEC produc-

ers to balance the market and ten consecu-

tive weeks of crude inventory draws amid

healthy economic growth and improving

oil demand.

ICE Brent was $4.99 higher at $69.08/b

in January, while NYMEX WTI surged $5.71 to

$63.66/b. The ICE Brent/NYMEX WTI spread

narrowed 73¢ to $5.42/b. Hedge funds raised

net long positions in ICE Brent and NYMEX

WTI to 1.08 million contracts, a new all-time

high record. The market structures for Brent,

WTI and Dubai are in sustained backwarda-

tion. In the first week of February, crude oil

futures lost around $6/b from the end of

January amid an overall decline in equity

markets and a slide in the US dollar, as well

as stronger-than-expected US supply and a

build in US inventories.


global GDP growth

forecast was revised

up by 0.1 percentage points to 3.8 per cent

for both 2017 and 2018, mainly supported

by advanced economies. US growth was re-

vised up in 2018 to 2.7 per cent, after growth

of 2.3 per cent in 2017. Growth in the Euro-

zone was lifted to 2.5 per cent in 2017 and

2.2 per cent in 2018. Japan’s growth forecast

remains unchanged in both 2017 and 2018

at 1.8 per cent and 1.6 per cent, respec-

tively. While China’s 2017 growth was bet-

ter than expected at 6.9 per cent, the 2018

growth forecast remains unchanged at 6.5

per cent. Also, India’s GDP growth forecast

remains unchanged at 7.2 per cent in 2018,

after growth of 6.5 per cent in 2017.

World oil demand

growth in 2017 is estimat-

ed to increase by 1.60m b/d, representing an

upward adjustment of some 30,000b/d com-

pared to last month’s projections, mainly to

reflect the continuing better-than-expected

data in OECD Europe in 3Q17. Total world

oil demand stood at 97.01m b/d in 2017. In

2018, world oil demand is foreseen to reach

98.60m b/d, representing growth of 1.59m

b/d, 60,000 b/d higher than the previous

month’s projections and mainly reflecting

the positive economic outlook.

Non-OPEC supply

in 2017 was revised up by

70,000 b/d, mainly due to an upward revi-

sion in the OECD, to average 57.86mb/d, rep-

resenting growth of 860,000 b/d. For 2018,

non-OPEC supply forecast was revised up by

320,000 b/d, to average 59.26m b/d, repre-

senting growth of 1.40m b/d, which was also

revised up by 250,000 b/d. Expectations for

higher production in the US, UK and Brazil,

as well as lesser declines inMexico and China

were the main reasons behind the upward

adjustment. OPEC NGLs and nonconvention-

al liquids’ production averaged 6.31m b/d in

2017, up by 170,000 b/d y-o-y. OPEC NGLs

are expected to grow by 180,000 b/d to av-

erage 6.49m b/d in 2018. In January 2018,

OPEC crude oil production decreased by

8,000 b/d, according to secondary sources,

to average 32.30m b/d.


in the Atlantic Basin showed

mixedperformance in January as refiningmar-

gins in the US turned around from the declin-

ing trend recorded in the previous month,

showing some gains, mainly at the top of the

barrel supported by cold weather-related re-

finery outages. Meanwhile, in Europe, prod-

uct markets lost some ground with weaken-

ing seen at the bottom of the barrel due to

supply-sidepressure. InAsia, productmarkets

weakened, with losses seen all across the bar-

rel, except for the middle distillate complex,

pressured by slower seasonal demand. Due

to higher scheduledmaintenance in February,

product markets in the USGC are expected to

receive some support on the back of lower

product supplies.


tanker spot freight rates


a general downward trend in January, which

affected vessels of different classes on all re-

ported routes. VLCC, Suezmax and Aframax

average spot freight rates declined by 17 per

cent, 31 per cent and 13 per cent m-o-m, re-

spectively. The decline was driven by low

tonnage demand, limited inquiries and port

maintenance as well as a prolonged tonnage

list. Similarly, clean tanker spot freight rates

were weak, mainly as fixtures to eastern des-

tinations showed lower rates than in the pre-

vious month.


OECD commercial oil stocks

fell in

December to stand at 2,888m b. At this lev-

el, OECD commercial stocks were 109m b

above the latest five-year average. Crude

and products stocks indicated a surplus of

around 100m b and 9m b above the season-

al norm, respectively. In line with the exist-

ing overhang, the market is only expected

to return to balance towards the end of this

year. In terms of days of forward cover,


commercial stocks

stood at 61.0 days in

December, some 1.1 days higher than the lat-

est five-year average.

Demand for OPEC crude

in 2017 is estimat-

ed to stand at 32.8m b/d, some 600,000 b/d

higher than the 2016 level. In 2018, demand

for OPEC crude is forecast at 32.9mb/d, slight-

ly higher than the 2017 level.

The feature article and oil market highlights are taken from OPEC’s Monthly Oil Market Report (MOMR) for February 2018. Published by the

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


, 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.