Published On: Fri, Dec 11th, 2015

OPEC Monthly Oil Market Report for December 2015

The OPEC Reference Basket declined by around 10% in November as lower refinery crude intake added to the oversupply in the market, according to OPEC Monthly Oil Market Report for December 2015.

The Basket lost $4.52 to stand at $40.50/b. Crude oil futures also fell, with ICE Brent averaging $45.93/b and Nymex WTI $42.92/b. The Brent-WTI spread widened marginally to $3.01/b.

Highlights of the report: World Economy World economic growth figures remain unchanged at 3.1% for the current year and 3.4% in 2016. With slightly stronger growth in the US and lower-than-expected growth in Japan in 3Q15, the OECD growth forecast remains at 2.0% for 2015 and 2.1% for 2016. The 2016 growth forecast for China remains unchanged at 6.4%, following estimated growth of 6.8% this year. India is expected to grow by 7.6% in 2016, unchanged from the previous report, while the growth estimate for the current year has been revised down to 7.3%.

World Oil Demand World oil demand is anticipated to increase by 1.53 mb/d this year, averaging around 92.88 mb/d. These projections are 30 tb/d higher than last month’s estimate, mainly as a result of better-than-expected consumption in OECD Europe and Other Asia. For 2016, global oil demand growth is expected to increase by around 1.25 mb/d, unchanged from the previous report, averaging 94.13 mb/d.

World Oil Supply Non-OPEC oil supply is estimated to grow by 1.00 mb/d in 2015 to average 57.51 mb/d.

This represents an upward revision of 0.28 mb/d from the previous report, driven mainly by actual production data from the US, UK, Brazil, Russia and China. For 2016, non-OPEC oil supply is now expected to contract by 0.38 mb/d to average 57.14 mb/d, following a downward revision of 0.25 mb/d. OPEC NGLs are expected to grow by 0.17 mb/d in 2016, compared to an increase of 0.16 mb/d this year. In November, OPEC production according to secondary sources rose by 230 tb/d from the previous month to average 31.70 mb/d.

Product Markets and Refining Operations Product markets in the Atlantic Basin strengthened during November on the back of positive performance of the top of the barrel. Gasoline and naphtha were supported by strong regional demand amid export opportunities, which improved margins and offset the lack of winter support. Meanwhile, Asian margins remained healthy on the back of higher seasonal demand in the region and a stronger petrochemical sector.

Tanker Market Lower tonnage demand drove down average VLCC spot freights rates in November, while both Suezmax and Aframax freight rates increased, mainly on the back of delays in several ports. West of Suez activities provided some support to clean spot freight rates, while East of Suez rates slightly dropped. OPEC sailings increased in November by 0.26 mb/d to average 24.21 mb/d. Tanker arrivals in most regions were lower in November, except arrivals at North American ports.

Stock Movements OECD commercial oil stocks fell in October to stand at 2,955 mb, but inventories were around 244 mb higher than the five-year average, with crude and products indicating a surplus of around 180 mb and 64 mb, respectively. In terms of days of forward cover, OECD commercial stocks stood at 63.5 days in October, 4.4 days higher than the five-year average.

Balance of Supply and Demand Demand for OPEC crude in 2015 is estimated to stand at 29.4 mb/d, an increase of 0.4 mb/d over last year and representing a downward revision of 0.2 mb/d compared to the previous report. In 2016, demand for OPEC crude is forecast at 30.8 mb/d, an increase of 1.5 mb/d over the current year and unchanged from the previous assessment.

Source: Emirates news agency

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