- The OPEC Reference Basket increased further in March, averaging $122.97/b, for a gain of $5.49/b or 4.7% over the previous month. The Basket was supported by supply glitches in the North Sea and East Africa, improving economic data from the US and China, and persistent geopolitical factors which were further amplified by speculative activities. Signs of adequate supply, higher refined product prices in major consuming countries, and on-going economic concerns, particularly for the Euro zone, did not affect increasing crude oil prices. However, the Basket has weakened recently to stand at $117.80/b on 11 April.
- World economic growth for 2012 has been revised down to 3.3% from 3.4%. US growth remains unchanged at 2.2% in 2012 amid a continuing improving trend. The forecast for Japan also remains at 1.8% with the recovery gaining traction. The Euro zone’s economic growth continues to decline and the forecast for 2012 now shows a contraction of 0.3%, down from minus 0.2% previously. Inflation in India remains a concern, which combined with an expected slowdown in output activity, has led to a downward revision to the 2012 forecast to now stand at 6.9%. China’s expansion remains at a solid 8.2%. With continued concern in the Euro-zone and the softening in the emerging markets, the outlook for the global economy remains fragile.
- World oil demand growth in 2012 remains at 0.9 mb/d, as offsetting economic developments across the globe have left the forecast unchanged from the previous report. US oil demand remains a key uncertainty to the existing demand assessment. The upcoming driving season might be affected by high retail gasoline prices and the pace of the economic recovery. At the same time, increasing consumption in Japan could positively impact world oil demand growth.
- Non-OPEC oil supply is forecast to grow by 0.6 mb/d in 2012, an upward revision of 30 tb/d from the previous month. The adjustment was supported mainly by healthy output in the first few months of the year from North America, the FSU and China. Anticipated growth continues to be driven by the US, Brazil, Russia, China, and Colombia, partially offset by declines in Sudan, South Sudan, Syria, Norway, and the UK. OPEC natural gas liquids (NGLs) and non-conventional oils are forecast to increase by 0.4 mb/d in 2012 to average 5.7 mb/d. According to preliminary data from secondary sources, total OPEC production in March averaged 31.31 mb/d, an increase of 136 tb/d from the previous month.
- Product market sentiment showed a mixed performance in March. Despite lacklustre demand in the Atlantic Basin, gasoline continued to recover on the back of export opportunities amid a tightening market. Middle distillates remained weaker worldwide, following disappointing demand over the winter season. Despite the recovery at the top of the barrel, refinery margins fell worldwide driven by losses at the middle, as well as higher oil crude prices.
- Tanker spot freight rates increased in March on the back of improved tonnage demand. Spot freight rates for clean tankers were mixed in March, with healthy gains from the Americas and a decline on transatlantic routes. OPEC spot fixtures and sailings increased in March compared to the previous month to average 12.2 mb/d and 23.4 mb/d, respectively.
- US commercial oil stocks rose 14.3 mb to 1,073.8 mb in March. With this build, inventories were 30.8 mb higher than a year ago and the surplus with the five-year average widened to 47.0 mb. Crude stocks increased 17.5 mb, while products fell by 3.2 mb. The most recent monthly data in Japan shows that commercial oil stocks fell 10.1 mb in February to stand at 157.8 mb. Inventories were 3.1 mb below a year ago and the deficit with the historical average widened to 12.0 mb. The total stockdraw was divided between crude and products, which declined by 4.5 mb and 5.6 mb, respectively.
- Demand for OPEC crude in 2011 remained broadly unchanged from the previous assessment at 30.1 mb/d, indicating growth of 0.4 mb/d compared to 2010. For the current year, demand for OPEC crude is expected to average 30.0 mb/d in line with the previous report and about 0.1 mb/d below last year’s level.
