Crude Oil Price Movements
The OPEC Reference Basket averaged $52.40/b in January, representing again of 73¢ over the previous month. NYMEX WTI and ICE Brent also saw
gains, increasing by 44¢ and 53¢ to average $52.61/b and $55.45/b,respectively. Production adjustments by OPEC and some non-OPEC
producers supported the market, although gains were capped by increased drilling activity in the US. The Brent-WTI spread widenedslightly to average $2.84/b in January.
World Economy
Global economic growth expectations remain at 3.0% in 2016 and 3.2% in 2017. OECD growth in 2017 was revised up to 1.9%, following upwardadjustments in the Euro-zone and UK. US economic growth remains
unchanged at 2.2%. Forecasts for China and India in 2017 also remain unchanged at 6.2% and 7.1%, respectively. Russia’s 2017 growth was
revised up to 1.0%, while Brazil’s growth forecast remains unchanged at 0.4%.
World Oil Demand
World oil demand growth in 2016 is expected to increase by 1.32 mb/d,following an upward adjustment of 70 tb/d to reflect continued
better-than-expected consumption in OECD Europe and Asia Pacific. Total oil demand is now estimated to average 94.62 mb/d, taking into account base line adjustments to China of around 0.12 mb/d. In 2017,
world oil demand growth is seen to reach 1.19 mb/d, representing an upward revision of 35 tb/d to now average 95.81 mb/d.
World Oil Supply
Non-OPEC oil supply growth in 2016 has been revised up by 50 tb/d tonow show a contraction of 0.66 mb/d on higher-than-expected output in
4Q16. In 2017, non-OPEC supply growth has been revised up by 120 tb/dto now show an increase of 240 tb/d, due to a pick up in drillingactivities and investment in the US. OPEC NGL production is forecast
to grow by 0.15 mb/d in 2017, following growth of 0.15 mb/d in 2016. In January, OPEC production decreased by 890 tb/d, according to secondary sources, to average 32.14 mb/d.
Product Markets and Refining Operations
Product markets in the Atlantic Basin received support in January from the top of the barrel on the back of higher export opportunities in
gasoline and naphtha. This, along with the positive performance at the bottom of the barrel, allowed refinery margins to remain healthy.
Meanwhile, margins in Asia strengthened on the back of firm regional demand.
Tanker Market
Spot freight rates continued to recover in January, showing general m-o-m improvements across all tanker sectors. Gains were mainly
driven by a firmer market in West Africa, the Middle East and the Mediterranean, along with delays due to congestion in the Turkish
Straits and severe weather conditions. Freight rates rose in January, despite a general decline in chartering activity.
Stock Movements
Total OECD commercial oil stocks fell in December 2016 to stand at 2,999 mb. At this level, OECD commercial oil stocks are 299 mb above
the five-year average. Crude and products showed surpluses of around 216 mb and 83 mb, respectively. In terms of forward cover, OECD
commercial stocks stood at 63.9 days, some 5.5 days higher than the five-year average. Balance of Supply and Demand Demand for OPEC crude
in 2016 averaged 31.3 mb/d, an increase of 1.8 mb/d over the previous year. In 2017, demand for OPEC crude is projected to average 32.1
mb/d, around 0.8 mb/d higher than last year.
