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Monthly Oil Market Report

2 3 ( &

12 April 2017

Feature article:

Summeroil market outlook

Oilmarkethighlights

Featurearticle

Crudeoilpricemovements

Commoditymarkets

Worldeconomy

Worldoildemand

Worldoilsupply

Productmarketsand refineryoperations

Tankermarket

Oil trade

Stockmovements

Balanceofsupplyanddemand

Monthlyendnotes

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107

OPEC bulletin 3–4/17

Despite some downside risks, general expectations

for demand growth for oil products in the com-

ing months remain bullish, according to the OPEC

Secretariat in Vienna.

In its

Monthly Oil Market Report (MOMR)

for April,

it said that this view was supported by a firm eco-

nomic performance across the globe and the expected

increase in demand for gasoline over the coming driv-

ing season, mainly in North America and Asia.

“Higher demand for oil products will encourage

refiners to maximize throughputs following the end

of the spring maintenance season, amid new capac-

ity coming on line in North America, the Middle East

and Asia,” a feature article in the publication stated.

“This, in turn, will increase demand for crude oil

over the comingmonths and already has for long-haul

crude oil deliveries.”

In looking at the summer oil demand outlook, the

MOMR

observed that the return of refineries fromsea-

sonal maintenance andhealthy demand, togetherwith

the high conformity observed in OPEC and non-OPEC

production adjustments, should enhance market sta-

bility and reduce the volatility seen in recent weeks.

It noted that product markets and refinery mar-

gins, particularly in the Atlantic basin, were impacted

in 2016 by the high level of inventories worldwide.

Additionally, the increase in crude oil prices and

the deceleration in diesel demand growth, mainly in

China and theUnited States, capped refinerymargins.

“In general, product crack spreads struggled to

recover in the latter part of the year as the colder win-

ter weather failed to boost prices,” said the article.

“TheUS is typically a key driver of productmarkets

in the run-up to the summer driving season. Despite

weakness at the beginning of 2017, the US gasoline

market has seen some recovery in recent weeks.”

The report said that after slowing by around

170,000 b/d year-on-year in January, US gasoline

demand had been on the rise, averaging more than

9.3m b/d in March, according to preliminary EIA

weekly data.

Another positive factor, it said, had been the

continued decline in US gasoline

inventories, which had fallen by

around 20m b since the end of

January.

“Heavy refinery maintenance

and higher exports to Latin

America have contributed to

these draws,” the feature article

pointed out.

It saidmiddle distillates had

also started to show a positive

performance in the US. A con-

tinued draw had been seen

in inventories amid demand

reachingmore than 4mb/d in

March, following growth of around 240,000

b/d y-o-y.

Outside the US, it said, the middle distillates mar-

ket had experienced some recovery from the slump

seen last year in several regions.

“Demand has picked up since the fourth quarter

and is expected to continue to recover over the coming

months, supported by the improving economic per-

formance, particularly in Asia where manufacturing

PMIs have moved higher, not only in India and China,

but also in Vietnam and the Philippines.”

The

MOMR

said gasoil demand in China was

expected to be supported by higher investments in

infrastructure and increasing mining activities.

“Healthy economic activities in Asia will have a

positive impact on all products in the region — par-

ticularly gasoil — in the coming months.”

In Europe, said the report, gasoil consumption

had also improved, due to the improving economy

across large parts of the continent, colder weather

during the first quarter of 2017 and the high growth

in vehicle sales.

However, this momentum was not expected to

continue over the rest of the year. As a result, global

gasoline and distillate demand was forecast to grow

by around a combined 718,000 b/d in 2017.

Summer outlook for oil

products “remains bullish”

April

2017