OPEC sees oil supply surge from rivals
The ORB dropped 5% MoM, lower for the first time in six months, to average USD 63.48/b, but remains above levels seen in more than two years. Year-to-date, the ORB was 23.4%, or $12.37, higher than seen in the same period a year earlier, at $65.25/b. Similarly, Dated Brent dropped by $3.97 m-o-m to average $65.16/b and spot WTI declined by $1.55 to average $62.15/b. Oil futures also ended lower, but by varying amounts. The sell-off in crude oil futures started early in the month with oil prices pulled lower, as major US stock markets declined sharply and the dollar firmed. The ICE Brent was $3.35, or 4.8%, lower, at $65.73/b, while NYMEX WTI slipped $1.48, or 2.3%, to $62.18/b compared to a month earlier. Year-to-date, ICE Brent was $11.77 higher than the same period a year earlier at $67.48/b, while NYMEX WTI rose by $9.93 to $62.96/b. The Brent-WTI spread narrowed significantly to around $3/b by the end of the month, on steep declines in inventories in Cushing, Oklahoma. Hedge funds reduced net long positions in ICE Brent and NYMEX WTI to 1.01 million contracts. Brent and Dubai backwardation eased, while that of WTI strengthened. The sweet-sour differentials narrowed globally, except in Europe.
In 2017, world oil demand growth is revised higher by 23 tb/d from February’s assessment to reflect the latest data. Total world oil demand growth for 2017 is now pegged at 1.62 mb/d, averaging 97.04 mb/d. For 2018, oil demand growth is now forecasted at around 1.60 mb/d, marginally higher than February’s projections, with total oil demand at 98.63 mb/d. Oil demand growth in the OECD region was revised higher in 1Q18, now showing growth of 0.32 mb/d for 2018. In the non-OECD region, growth projections were also adjusted higher by 20 tb/d in 1Q18, now showing growth of 1.27 mb/d in 2018.
For 2017, non-OPEC supply is revised up slightly by 0.01 mb/d from February’s assessment, mainly due to higher-than-expected output growth in 4Q17, representing growth of 0.87 mb/d y-o-y. For 2018, non-OPEC supply is revised up by 0.28 mb/d, representing y-o-y growth of 1.66 mb/d, with total non-OPEC supply reading 59.53 mb/d. The upward revision is mainly due to higher-than-expected output in 1Q18 by 360 tb/d in OECD (Americas and Europe), FSU and China. OPEC NGLs are now expected to grow by 0.18 mb/d in 2018, following 0.17 mb/d a year earlier. According to secondary sources, OPEC crude production decreased by 77 tb/d in February 2018, averaging 32.19 mb/d.
In 2017, demand for OPEC crude is estimated to remain unchanged to stand at 32.9 mb/d, 0.6 mb/d higher than the 2016 level. In 2018, demand for OPEC crude is forecast at 32.6 mb/d, down by 0.2 mb/d from the previous assessment and 0.2 m/d lower than a year earlier.
Source : Strategic Research Institute