OPEC has published its monthly oil market report for June. The highlights include:
Crude oil price movements
The OPEC Reference Basket averaged US$43.21/bbl in May. ICE Brent ended up US$4.31 at US$47.65/bbl, while Nymex WTI rose US$46.80/bbl. The ICE Brent-Nymex WTI spread narrowed significantly to 85¢/b in May from US$2.21/b the month before.
World economic growth is forecast at 3.1% for 2016, after estimated growth of 2.9% the year before, both unchanged from the previous month. OECD growth in 2016 remains at 1.9%, slightly below the 2.0% seen in 2015. The forecast for the major emerging economies remains unchanged. China and India continue to expand this year at a considerable level of 6.5% and 7.5%, respectively. Brazil and Russia, however, are forecast to remain in recession this year, contracting by 3.4% and 1.1%, respectively.
World oil demand
World oil demand growth for 2016 remains unchanged from the previous report at 1.20 million bpd to average 94.18 million bpd. Other Asia, led by India, is anticipated to be the main contributor to oil demand growth in 2016. Transportation fuels are projected to provide the bulk of expected growth. The 2015 growth estimate was also left unchanged at 1.54 million bpd to average 92.98 million bpd.
World oil supply
The forecast for non-OPEC oil supply in 2016 remains unchanged, with a contraction of 0.74 million bpd expected to average 56.40 million bpd. The downward revisions in Canada, Brazil and Colombia broadly offset upward revisions in the US, UK, Russia and Azerbaijan.
Product markets and refining operations
The high level of inventories in light and middle distillates, along with the approaching end of the spring maintenance season, offset the potential impact from events in Canada and France. This caused margins to edge lower in the Atlantic Basin, despite stronger gasoline demand in the region. In Asia, refinery margins showed a slight recovery.
Sentiment in the dirty tanker market was generally weak in May. VLCC and Suezmax spot freight rates declined on the back of light tonnage demand and increased tanker availability. However, Aframax spot freight rates improved. Clean tanker freight rates declined on average, as a result of low freight rates reported for West of Suez. In May, global chartering activities dropped and sailings from the Middle East, and OPEC more broadly, were lower month-on-month.
Balance of supply and demand
Demand for OPEC crude in 2016 is projected at 31.5 million bpd.
Edited from press release by Angharad Lock
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