MOMR August 2012 - Opec

_________________________________________________________________________________________________________________________________________Monthly Oil Market Report
Oil Market Highlights
§ The OPEC Reference Basket in July rebounded from a three-month long declining streak to settle
near $100/b, almost 6% above the previous monthly level. All Basket component values improved
by around $6. Year-to-date, the Basket averaged $110.28/b. Crude oil futures prices recovered from
the low levels reached in June, although most of the fundamental reasons behind the fall remain in
play as the greater uncertainty economic outlook persists and global crude inventories are
somewhat high. ICE Brent front-month prices increased by over 7% to settle at $102.72/b, while the
WTI front-month improved by $5.53 to average $87.93/b. So far this month, the OPEC Reference
Basket has continued to rise, standing at $108.36/b on 8 August.
§ World economic growth forecasts remain unchanged at 3.3% for 2012 and 3.2% for 2013. The US
economy has seen some marginal improvements, leading an upward revision of 0.1 percentage
points (pp) to the 2012 projection, which now stands at 2.2%, while the forecast for 2013 remains at
2.0%. Other forecasts remain broadly unchanged. Japan’s recovery continues to face external
challenges and growth is forecast at 2.5% in 2012 and 1.2% in 2013. Uncertainties prevail in the
Euro-zone and the economy is expected to contract by 0.4% this year before expanding by 0.1% in
2013. Amid efforts to stimulate the economy, China’s growth forecast for 2012 remains at an
encouraging 8.1% in 2012 and at 8.0% in 2013. India is seen growing at 6.4% and 6.6%
respectively in 2012 and 2013.
§ World oil demand has overcome earlier expectations of a declining momentum and moved to a
more stabilized trend, supported by the summer driving season, the summer heat, and the
continued shutdown of most of Japan’s nuclear capacity. As a result, the forecast for global oil
demand growth in 2012 remains unchanged at 0.9 mb/d. There is considerable uncertainty
surrounding the forecast for world oil demand growth in 2013, which remains unchanged at
0.8 mb/d. However, risks are currently seen to be skewed to the downside.
§ Non-OPEC supply is expected to increase by 0.7 mb/d in 2012, following an upward adjustment to
the absolute level, mainly due to historical revisions, as well as an improved outlook and higherthan-expected
output from the US, Australia, the Sudans, and Yemen. In 2013, non-OPEC oil
supply is forecast to grow by 0.9 mb/d, unchanged from the previous report, supported by projected
increases in the US, Canada, Brazil, Kazakhstan, and the Sudans. OPEC NGLs and nonconventional
oils are projected to increase by 0.4 mb/d in 2012 and 0.2 mb/d in 2013, unchanged
from the previous assessment. In July, total OPEC crude oil output averaged 31.19 mb/d, according
to secondary sources, representing a drop of 0.16 mb/d from the previous month.
§ The positive performance in light and middle distillates allowed product markets to continue
strengthening in the Atlantic Basin. Despite weaker fuel oil demand and increasing crude prices
cracks remained on the healthy side. In Asia, refinery margins exhibited a sharp recovery on the
back of rising demand in naphtha and gasoline amid tighter sentiment due to refinery shutdowns and
heavy maintenance in the region.
§ The tanker market was very quiet in July with spot freight rates for dirty carriers declining on all
classes. This decrease was driven by high tonnage availability and lower tonnage demand. Clean
tanker spot freight rates fell west of Suez, but increased east of Suez, amid healthier activity. In July,
OPEC spot fixtures rose by 1.3%, while OPEC sailings stayed almost stable to average 23.93 mb/d.
Arrivals in North America and West Asia increased, while arrivals in Europe and the Far East fell.
§ US total commercial oil stocks rose for the third consecutive month in July, up 7.3 mb, to end the
month at 1,105.4 mb, the highest level since October 2011. Inventories stood 3.6 mb above a year
ago and 27.8 mb over the five-year average. The build was attributed mainly to products, which rose
by 16.6 mb, while crude declined by 9.3 mb. In Japan, the most recent monthly data shows
commercial oil stocks increased a further 0.5 mb in June, the fourth consecutive gain, to stand at
177.5 mb. Inventories stood 1.6 mb over a year ago and 1.1 mb above the five-year average. The
total stock-build came from products, which rose 1.3 mb, while crude stocks fell 0.9 mb.
§ Demand for OPEC crude for this year has been revised slightly down from the previous
assessment, but remain at 29.9 mb/d, representing a decline of 0.1 mb/d compared to the 2011
level. Demand for OPEC crude in 2013 is forecast to average 29.5 mb/d, a drop of 0.4 mb/d from the
current year and representing a downward adjustment of 0.1 mb/d from the previous report.
August 2012
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