Crude Oil Price Movements
The OPEC Reference Basket increased by more than 20% to reach $34.65/b in March.
ICE Brent ended up $6.26 at $39.79/b and Nymex WTI surged by $7.34 to $37.96/b.
Speculators have amassed a near-record number of bullish bets on increasing oil prices.
The Brent-WTI spread narrowed considerably in March to stand at $1.83/b, prompting
renewed US buying interest in West African light sweet grades.
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, China and India
continue to expand this year at 6.3% and 7.5%, respectively, unchanged from the previous
report. Meanwhile, Brazil is forecast to move further into recession this year, contracting by
2.9%, while the contraction in Russia’s economy is unchanged at 1.1%.
World Oil Demand
World oil demand is expected to grow by 1.54 mb/d in 2015, unchanged from the previous
report, to average 92.98 mb/d. For 2016, global oil demand growth is anticipated to be
around 1.20 mb/d, representing a minor downward revision of 50 tb/d from previous
expectations, mainly reflecting the slower economic momentum in Latin America. Total
consumption is projected to reach 94.18 mb/d in 2016.
World Oil Supply
Non-OPEC supply growth in 2015 has been revised up slightly to stand at 1.46 mb/d to
average 57.13 mb/d. In 2016, the expected contraction in non-OPEC oil supply will be
slightly more than forecast, with output falling by 0.73 mb/d to average 56.39 mb/d. OPEC
NGL production is expected to grow by 0.17 mb/d in 2016, up from 0.15 mb/d last year,
unchanged from the previous report. In March, OPEC crude production increased by
15 tb/d to average 32.25 mb/d, according to secondary sources.
Product Markets and Refining Operations
Product markets in the US were supported by strong domestic gasoline demand fueled by
the switch to summer grade gasoline, which allowed refinery margins to remain healthy. In
Europe, the lack of export opportunities in gasoline and fuel oil amid weakness in middle
distillates caused margins to continue to fall. Meanwhile, refinery margins in Asia exhibited
a slight recovery on the back of stronger regional demand and tightening sentiment due to
refinery maintenance in the region.
Average dirty tanker freight rates in March rose by 5% compared to the previous
month, mainly as VLCC freight rates increased in March supported by loading delays and
ullage problems in the eastern ports. Clean tanker freight rates improved East of Suez but
encountered a decline West of Suez impacted by limited tonnage demand. Global
chartering activities were higher in March, while arrivals increased in European and far
OECD commercial oil stocks fell in February to stand at 3,026 mb. At this level, OECD
commercial oil stocks are around 351.8 mb above the latest five-year average, with crude
and products indicating a surplus of 240.7 mb and 111.1 mb, respectively. In terms of days
of forward cover, OECD commercial stocks stood at 66.4 days, some 7.4 days higher than
the latest five-year average.
Balance of Supply and Demand
Demand for OPEC crude in 2015 is estimated at 29.7 mb/d, unchanged from the previous
month and 0.1 mb/d lower than the year before. In 2016, demand for OPEC crude is
projected at 31.5 mb/d, broadly unchanged from the previous report and 1.8 mb/d higher
than last year.