Oil Market Highlights
Crude Oil Price Movements
In August, the OPEC Reference Basket (ORB) increased by $6.27, or 7.7%, m-o-m to average of $87.33/b.
The ICE Brent front-month contract rose by $4.94, or 6.2%, m-o-m to average $85.10/b, and the NYMEX WTI
front-month contract increased by $5.29, or 7.0%, m-o-m to average $81.32/b. The DME Oman front-month contract rose by $5.30, or 6.5%, m-o-m to settle at $86.46/b. The front-month ICE Brent/NYMEX WTI spread
narrowed by 35¢ m-o-m to average $3.78/b. The futures forward curves of ICE Brent, NYMEX WTI and DME Oman steepened further on the improving outlook for oil market fundamentals. At the same time, hedge funds and other money managers cut their total net long positions in ICE Brent and NYMEX WTI.
World economic growth forecast remains unchanged at 2.7% for 2023 and at 2.6% for 2024. US economic growth forecast remains at 1.8% for 2023 and 0.7% for 2024. Similarly, the Euro-zone economic growth
forecast for 2023 and 2024 remains at 0.6% and 0.8%, respectively. Japan’s economic growth forecast is revised up to stand at 1.5%, while forecast growth for 2024 is unchanged at 1.0%. China’s 2023 economic growth forecast remains at 5.2%, with 2024 slightly lower at 4.8%, both unchanged from last month. India’s 2023 economic growth forecast is revised up to 6%, while growth for 2024 remains at 5.9%. Brazil’s economic growth forecast is revised up to 2.1% in 2023, while growth for 2024 is unchanged at 1.2%. For Russia, the 2023 economic growth forecast is revised up to 1.0%, while the growth forecast for 2024 remains at 1.0%
World Oil Demand
World oil demand growth forecast in 2023 remains unchanged at 2.4 mb/d. Upward revisions made are all based on actual data received for China, US and OECD Europe, while Other Asia is revised downwards. In the OECD region, oil demand in 2023 is expected to rise by 0.1 mb/d, while in the non-OECD region, oil demand is expected to rise by about 2.3 mb/d. For 2024, world oil demand is expected to grow by a healthy 2.2 mb/d, unchanged from the previous month’s assessment. The OECD is expected to grow by about 0.3 mb/d, with OECD Americas contributing the largest increase. The non-OECD is set to drive growth,
increasing by about 2.0 mb/d, with China, India, Middle East and Other Asia contributing the most.
World Oil Supply
Non-OPEC liquids supply growth forecast is revised up slightly to 1.6 mb/d in 2023. Main drivers of liquids supply growth for 2023 include the US, Brazil, Norway, Kazakhstan, Guyana and China. For 2024, non-OPEC liquids production is expected to grow by 1.4 mb/d, unchanged from the previous month’s assessment. Main drivers for liquids supply growth next year are set to be the US, Canada, Guyana, Brazil, Norway and Kazakhstan. The largest declines are anticipated in Mexico and Malaysia. OPEC NGLs and non-conventional liquids are forecast to grow by around 50 tb/d in 2023 to average 5.44 mb/d and by another 65 tb/d to average 5.51 mb/d in 2024. OPEC-13 crude oil production in August increased by 113 tb/d m-o-m to an average
27.45 mb/d, according to available secondary sources.
Product Markets and Refining Operations
In August, refinery margins strengthened and reached their largest monthly gains since January 2023. In the US Gulf Coast (USGC), margins trended upwards for the third consecutive month given robust middle distillates performance, which drove margins to new highs. In Rotterdam, strong diesel exports to the US, amid
healthy jet/kerosene requirements, led to lower availability for both products in the region. In Singapore, margins received support from a tighter product balance as delays in product export quotas limited product supplies from China to Singapore. The global refinery intake showed a 1.1 mb/d m-o-m gain in August to an average of 82.9 mb/d, resulting in a year-on-year intake growth of about 3.9 mb/d. In the coming months, refinery intakes are expected to come under pressure from rising offline capacities, amid the start of a heavymaintenance season.
Oil Market Highlights
iv OPEC Monthly Oil Market Report – September 2023
The tanker market showed a mixed performance in August. Dirty tanker freight rates continued to decline across all monitored routes, as long tonnage lists and reduced activities weighed on rates. VLCCs were down 12% m-o-m on the Middle East-to-East route. In the Suezmax market, rates on the US to Europe route fell 20%, despite the region seeing slightly more activity. Aframax rates on the Mediterranean-to-Northwest Europe route declined 20%. Limited activities also prompted increased competition between the various vessel
classes, further weighing on rates. In contrast, clean spot freight rates saw another month of improvements across the board on all monitored routes, amid increased activities toward the end of the month
Crude and Refined Products Trade
Preliminary data shows US crude imports in August averaged 6.9 mb/d, the highest since August 2019 amid increased flows from Latin America, while US crude exports moved back above 4 mb/d supported by higher flows to South Korea. Japan's crude imports edged up m-o-m in July to average 2.34 mb/d after witnessing a 12 month low in June, while the country’s product flows experienced marginal adjustments. China’s crude imports have shown some volatility in recent months, although with an overall good performance so far this
year. Crude inflows fell to 10.3 mb/d in July, following two months above 12 mb/d, as refiners leaned oninventories. However, recently released August data show China’s crude imports rebounded again to average 12.4 mb/d, with summer gasoline demand and positive export margins for diesel providing support. India's July
crude imports declined m-o-m for the fifth month in a row to average 4.6 mb/d. India’s product exports remained flat for the third month in a row, averaging 1.3 mb/d. Preliminary estimates show OECD Europe crude imports strengthened further in August, amid higher inflows from Brazil. Product imports were down slightly, as a sharp fall in diesel imports outpaced an uptick in jet and LPG.
Commercial Stock Movements
Preliminary data for July 2023 sees total OECD commercial oil stocks down by 7.9 mb m-o-m. At 2,779 mb,
they were 190 mb below the 2015–2019 average. Within the components, crude stocks fell by 14.2 mb
m-o-m, while products stocks rose by 6.3 mb m-o-m. OECD commercial crude stocks stood at 1,348 mb in
July, which is114 mb lower than the 2015–2019 average. Total product stocks stood at 1,430 mb in July, which
is 77 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial stocks in July
remained unchanged at 59.5 days m-o-m, which is 3.0 days below the 2015–2019 average.
Balance of Supply and Demand
Demand for OPEC crude in 2023 is revised down by 0.1 mb/d from the previous month’s assessment to stand
at 29.2 mb/d, which is around 0.8 mb/d higher than in 2022. Demand for OPEC crude in 2024 is also revised
down by 0.1 mb/d from the previous month’s assessment to stand at 30.0 mb/d, which is 0.8 mb/d higher than
the estimated 2023 level.