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OPEC bulletin 5–7/17

MOMR … oil market highlights

May 2017

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


OPEC Reference Basket

rose 2.0 per

cent in April to average $51.34/barrel. Crude

oil futures recovered on the high conform-

ity by OPEC and non-OPEC with voluntary

production adjustments and expectations

for an extension to the year-end; however,

upward potential was seen as limited by

a resurgence in oil output, particularly in

the US. ICE Brent increased 2.4 per cent to

$53.82/b and NYMEX WTI rose 2.9 per cent

to $51.12/b. The Brent-WTI spread narrowed

slightly to $2.70/b, but still kept the arbitrage

open for US crude exports. Money manager

net long positions rose 30 per cent from the

end of March until the middle of April, but

dropped by one of the largest weekly falls on

record in the last week of April.

The forecast for

global economic growth

remains at 3.3 per cent in 2017, compared to

growth in 2016 of 3.0 per cent. The recent

growth dynamic in the global economy has

been confirmed with the exception of the

US, which is still expected to rebound in

the remainder of the year. While US growth

remains at 2.2 per cent, Euro-zone growth in

2017 was revised to 1.7 per cent from 1.6 per

cent. Japan’s 2017 growth forecast remains

at 1.2 per cent. China’s 2017 growth was also

revised higher to 6.5 per cent from 6.3 per

cent, while India’s forecast remains at 7.0

per cent. Russia’s and Brazil’s 2017 growth

forecasts remain unchanged at 1.2 per cent

and 0.5 per cent, respectively.

World oil demand

in 2016 was revised

higher by 65,000 b/d to reflect the most

recent data. Total world oil demand growth

for 2016 stood at 1.44m b/d to average

95.12m b/d. For 2017, oil demand growth

is anticipated to be around 1.27m b/d,

unchanged from the previous report with

total oil demand expected at 96.38m b/d.

Non-OECD will continue to lead growth at

1.04m b/d, while OECD continues to grow,

albeit at a reduced pace of 0.23m b/d.

Non-OPEC oil supply

in 2016 was revised

marginally lower due to a downward adjust-

ment in Russian oil supply in 4Q16 to now

show a contraction of 0.71m b/d to average

57.3m b/d. The forecast for 2017 was revised

upby0.37mb/d to showgrowthof 0.95mb/d,

following upward adjustments in all quarters,

mostly in the US, to average 58.3m b/d. The

revisions were driven by actual production

data for February, as well as higher expec-

tations for the remainder of the year. OPEC

NGLs and non-conventional oil production in

2017 was revised up by 40,000 b/d to aver-

age 6.22mb/d, representing growth of 0.17m

b/d. In April, OPEC production decreased by

18,000 b/d, according to secondary sources,

to average 31.73m b/d.


strengthened inApril in the

Atlantic basin, supported by stronger domes-

tic demand amid higher export opportunities.

Lower inflows and heavy refinery mainte-

nance also resulted in a tighter market. The

main support came from gasoline, with US

domestic demand recovering in April from

the slump suffered during the first quarter

amid the shift to summer grades and higher

exports to Latin America. Meanwhile, Asia

margins continued healthily on the back of

firm regional demand at a time of peakmain-

tenance in the region.

Average tanker spot

freight rates

fell 0.4

per cent from the month before, despite a

stronger VLCC market. VLCC spot freight

rates improved, rising by 20 per cent on

average, as a result of enhanced activity in

the market and a tightening in tonnage sup-

ply. Nevertheless, the decline in average dirty

spot freight rates was driven by the drop in

Suezmax and Aframax freight rates, which

ended the month down eight per cent and

ten per cent, respectively, as tonnage demand

for both classes was limited, while tonnage

oversupply was dominant.


OECD commercial oil stocks

fell in

March to stand at 3,013m b. At this level,

OECD commercial oil stocks are 276m b

above the latest five-year average. Crude

and products stocks indicated a surplus of

around 187m b and 89m b above the sea-

sonal norm, respectively. In terms of forward

cover, OECD commercial stocks stood at 64.8

days, some 4.8 days higher than the latest

five-year average.

Demand forOPECcrude

in 2016nowstands

at 31.8mb/d, which is 2.0mb/d higher than in

the previous year. In 2017, demand for OPEC

crude is projected at 31.9mb/d, around 0.2m

b/d higher than last year.

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