The OPEC Reference Basket slipped slightly in September to US$42.89/bbl, down 21¢.
ICE Brent ended up 8¢ at US$47.24/bbl and NYMEX WTI increased 43¢ to $45.23/b. Crude oil prices were supported by efforts to address excess global supplies and consecutive draws in US crude stockpiles. The Brent-WTI spread narrowed to $2.01/b.
World economic growth remains unchanged at 2.9% for 2016 and 3.1% for 2017. The OECD growth forecast remains at 1.6% and 1.7% for 2016 and 2017, respectively. Forecasts for China and India are also unchanged at 6.5% and 7.5% for 2016 and 6.1% and 7.2% for 2017. Braziland Russia are forecast to grow by 0.4% and 0.7% in 2017, following contractions of 3.4% and 0.6% this year.
World oil demand
World oil demand in 2016 is seen increasing by 1.24 mb/d to average 94.40 mb/d, after a marginal upward revision of around 10 tb/d from the September MOMR, mainly to reflect the latest data. Positive revisions were primarily a result of higher-than-expected demand in the Other Asia region, while downward revisions were a result of lower-than-expected performance from OECD America. In 2017, world oil demand is anticipated to rise by 1.15 mb/d, unchanged from the September MOMR, to average 95.56 mb/d.
World oil supply
Non-OPEC oil supply in 2016 is now expected to contract by 0.68 mb/d, following a downward revision of around 70 tb/d from the September MOMR to average 56.30 mb/d. This is mainly due to base line revisions. In 2017, non-OPEC supply was revised up slightly by 40 tb/d to show growth of 0.24 mb/d to average 56.54 mb/d, mainly due to new projects coming on stream in Russia. OPEC NGLs are expected to average 6.43 mb/d in 2017, an increase of 0.15 mb/d over the current year. OPEC crude production, according to secondary sources, increased by 0.22 mb/d in September to average 33.39 mb/d.
Product markets and refining operations
Product markets in the Atlantic Basin experienced a mixed performance as margins fell in the US, hit by a seasonal slowing in gasoline demand in the US as the driving season ended. In Europe, margins were supported by higher export opportunities along with slowing inflows, which eased the gasoil oversupply in the region. Meanwhile, Asian margins strengthened on the back of stronger regional demand amid the onset of the autumn refinery maintenance season.
Dirty vessel spot freight rates increased on average in September compared to the previous month, supported by enhanced activity. The stronger sentiment was mainly driven by higher freight rates for Suezmax and Aframax, while average VLCC freight rates remained stable. Prompt replacements and increased activity supported freight rates in September. However, high vessel availability continued to weigh on the market amid considerable growth in the global fleet this year. In the clean tanker market, spot freight rates remained under pressure with declines in both East and West of Suez.
OECD total commercial stocks fell in August to stand at 3094 mb, some 322 mb above the latest five-year average. Crude and product inventories showed surpluses of 191 mb and 131 mb, respectively. In days of forward cover, OECD commercial stocks in August stood at 66.7 days, some 6.7 days higher than the seasonal average.
Balance of supply and demand
Demand for OPEC crude in 2016 is estimated to stand at 31.8 mb/d, an increase of 1.8 mb/d over last year. In 2017, demand for OPEC crude is forecast at 32.6 mb/d, a rise of 0.8 mb/d over the current year.
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