Oil market highlights
Crude Oil Price Movements
The OPEC Reference Basket averaged $37.86/b in April, a gain of $3.21 or 9.3%. This
was 40% higher than the lows reached in the beginning of the year, buoyed by
expectations for an improving market situation, despite the current persistent oversupply.
Oil futures surged more than 8%, with ICE Brent up $3.55 to average $43.34/b, while
Nymex WTI rose $3.16 to $41.12/b.
World economic growth is forecast at 3.1% in 2016, after estimated growth of 2.9% last
year, both unchanged from the previous month. OECD growth in 2016 remains at 1.9%,
slightly below the 2.0% seen in 2015. In the emerging economies, India and China
continue to expand this year at a considerable level of 7.5% and 6.5%, respectively, with
China having been revised up by 0.2 pp after a better-than-expected 1Q16. Brazil and
Russia, however, are forecast to remain in recession this year, contracting by 3.4% and
1.1% respectively, with Brazil having been revised down by 0.5 pp.
World Oil Demand
World oil demand in 2015 grew by around 1.54 mb/d, unchanged from last month’s report.
Total oil consumption averaged 92.98 mb/d. In 2016, world oil demand is projected to rise
by 1.20 mb/d to reach 94.18 mb/d, unchanged from last month’s projections, despite
upward revisions to Other Asia, which were counterbalanced by downward revisions to
Latin America and China.
World Oil Supply
Non-OPEC oil supply growth for 2015 has been revised up slightly to 1.47 mb/d for an
average of 57.14 mb/d. For 2016, non-OPEC oil supply was adjusted lower to average
56.40 mb/d, contracting by 0.74 mb/d. The estimate for OPEC NGLs and non-conventional
oils in 2015 has been revised down by 20 tb/d based on direct communication to show a
rise of 0.13 mb/d to average 6.13 mb/d. Growth in 2016 has also been adjusted lower to
0.16 mb/d to average 6.29 mb/d. In April, OPEC crude oil production rose 188 tb/d to
average 32.44 mb/d, according to secondary sources.
Product Markets and Refining Operations
Product markets in the US were supported by strong domestic gasoline demand amid
tightening sentiment due to some outages and maintenance. In Europe, higher export
opportunities for gasoline ahead of the driving season lent support to refinery margins.
Meanwhile, Asian margins weakened despite peaking refinery maintenance in the region
as the oversupply in middle distillates weighed on product markets.
Dirty tanker spot freight rates declined on the back of lower VLCC and Aframax freight
rates as tonnage availability grew while market activity remains limited. Suezmax spot
freight rates improved in April supported by strong sentiment for several destinations
combined with an occasionally tight position list. In the clean tanker market, West of Suez
activities supported freight rates, while East of Suez rates remained weak.
OECD commercial oil stocks fell in March to stand at 3,049 mb. At this level, OECD
commercial oil stocks are around 361 mb above the latest five-year average. Crude
inventories showed a lower surplus of 215 mb, while products were broadly flat at 146 mb.
In terms of forward cover, OECD commercial stocks stood at 66.8 days, some 7.5 days
higher than the latest five-year average.
Balance of Supply and Demand
Demand for OPEC crude in 2015 is estimated to average 29.7 mb/d, unchanged from the
previous month and 0.1 mb/d lower than the previous year. In 2016, demand for OPEC
crude is projected at 31.5 mb/d, unchanged from the previous report and 1.8 mb/d higher
than last year