Crude Oil Price Movements
OPEC Monthly Oil Market Report – October 2017
In addition to seasonal refined products demand, unplanned refinery shutdowns in Europe and the USGC
have helped refining margins globally. Oil field maintenance as well as the ongoing lower supply of sour
crudes, particularly in Asia and Europe, due to the OPEC and non-OPEC production adjustment, has
underpinned physical crude oil values. Oil price gains have also been supported by anticipated demand from
US refiners resuming operations after shutdowns due to Hurricane Harvey.
Nevertheless, the market was also under pressure from a build in US oil inventories resulting from lower
refinery runs on the USGC due to the shutdown of several refineries when Hurricane Harvey hit.
rose $3.84, or 7.7%, to
settle at $53.44/b on a monthly average basis. For
3Q17, the ORB was 3.1%, or $1.50, higher at
$49.98/b. Compared to the previous year, the ORB
value was 30.1%, or $11.59, higher at $50.13/b.
ORB component values
improved along with
relevant crude oil benchmarks and monthly
changes in their respective OSP differentials.
A healthy physical market, particularly in the
North Sea, also supported ORB components linked
to Brent. Crude oil physical benchmarks, namely
Dated Brent, Dubai and WTI spot prices, increased
by $4.41/b, $3.27/b and $1.68/b, respectively.
The uplift in the Brent crude benchmark along with
elevated price differentials supported light sweet
Basket components from West and North
, boosting prices sizably to above $55/b.
Graph 1 - 1: Crude oil price movement
Saharan Blend, Es Sider, Girassol, Bonny Light, Equatorial Guinea’s Zafiro and Gabon’s Rabi values
increased by $4.74 on average, or 9.2%, to $56.07/b. Physical crude price differentials for these grades
remain high, on higher demand from Asia, particularly China and India. Booming refinery profits are helping
West African oil producers to sell cargoes at higher values, aided by a shortage in certain types of crude
amid the OPEC and non-OPEC producing countries’ voluntary production adjustments and geopolitical
disturbances. Nevertheless, sales from storage, spurred on by a flat forward structure in Brent prices,
capped West African crude price differentials.
Latin American ORB components
Venezuelan Merey and Ecuador’s Oriente edged up to $49.13/b and
$51.30/b, gaining $3.75, or 8.3%, and $3.85, or 8.1%, respectively. Tight sour crude supplies in the USGC
and high exports continue to support these grades, despite the shutdown of several heavy conversion
refineries on the USGC.
Buoyed again by the uplift in OSP offsets and support from healthy Asian demand as they prepared to ramp
up heating oil production for peak winter demand in the northern hemisphere, the value of
Arab Light, Basrah Light, Iran Heavy and Kuwait Export improved further. On average,
these grade values expanded by $3.63 for the month, or 7.4%, to $52.71/b.
Middle Eastern spot components
, Murban and Qatar Marine, saw their values improve by $3.43, or 6.7%,
to $54.94/b and $3.20, or 6.4%, to $52.91/b, respectively. Spot premiums for Middle East crude for year-end
loading have hit multi-month highs, spurred on by robust demand in Asia. Asian buyers snapped up spot
cargoes this month after Saudi Aramco and the Abu Dhabi National Oil Company lowered supplies and as
they both prepared to ramp up heating oil production for peak winter demand.
On 10 October, the ORB stood at $54.23/b, 79ȼ above the September average.
Sources: Argus Media, OPEC Secretariat and Platts.