OPEC Monthly Oil Market Report, March 2010
|March 20 2010|
The OPEC Monthly Oil Market Report covers major issues affecting the world oil market and provides an outlook for crude oil market developments for the coming year. The report provides a detailed analysis of key developments impacting oil market trends in world oil demand, supply as well as the oil market balance.
Oil Market Highlights
❏ The OPEC Reference Basket fell by $3.02/b or 4% to reach to $72.99/b in February. The decline was mainly attributed to growing concern about the economic recovery triggered by sovereign debt issues in the Euro-zone, particularly in Greece. However, market sentiment changed recently amid more positive economic data and rising equities, which provide support for crude prices as well. Following these developments, the OPEC Reference Basket rose to $77.86/b on 8 March before settling down to $77.38/b on 9 March.
❏ The forecast for the world economy remains unchanged at 3.4% growth for 2010 following a contraction of 0.9% in 2009. Minor revisions were carried out for some economies. In the OECD, the US has been revised down slightly to 2.4% and Japan adjusted higher to 1.3%.
In the developing countries, China was revised up to 9.3%. The global economy continues to be mostly supported by the governmental-led stimulus. Concerns remain regarding the level of public debt in almost all OECD regions, record-high unemployment levels across the globe and the ability of China to avoid an overheating
❏ World oil demand is expected to grow by 0.9 mb/d in 2010, following a contraction of 1.4 mb/d in the previous year. This represents an upward revision of 0.1 mb/d from the previous assessment. Oil demand has been highly dependent upon the pace of the global economic recovery. OECD demand is still expected to remain at negative growth around 0.15 mb/d, while non-OECD demand is projected to grow by 1.0 mb/d, driven by China and the Middle East region.
❏ Non-OPEC oil supply is projected to increase by 0.4 mb/d in 2010, following growth of 0.6 mb/d in the previous year. The 2010 figure represents an upward adjustment of 0.1 mb/d from the previous assessment, mainly due to revisions to the estimations for processing gains as well as various historical data updates. OPEC NGLs and non-conventional oils are expected to average 4.9 mb/d in 2010, an increase of 0.5 mb/d over the previous year. In February, OPEC crude oil production rose by 192 tb/d to average 29.36 mb/d, according to secondary sources.
❏ Continuation of the cold weather along with refinery strike in France and lower crude prices provided support for refining margins in February. Seasonal refinery turnaround and continuation of discretionary run cuts have also contributed to positive developments in the product markets. With the approaching end of winter season and lack of robust demand for major products, product market sentiment is not expected to improve significantly in the near future. This situation may encourage refineries to continue their low run policy and exert pressure on crude market fundamentals.
❏ In February, the tanker market weakened, with spot freight rates decreasing on all routes. The decline was backed by various holidays, refinery maintenance and reduction of delays. OPEC fixtures decreased by 1.6 mb/d to average 11.1 mb/d, which correspond to almost two thirds of total export fixtures. OPEC sailing increased by 0.43 mb/d to 23.30 mb/d, according to preliminary estimates.
❏ US commercial oil inventories remained broadly unchanged in February. A build in crude was offset by the draw in products, leaving US commercial inventories at 73 mb above the seasonal norm. In January, commercial oil inventories in Japan rose by 2.7 mb, but remained 15 mb below the five-year average. Preliminary indications for February shows a draw divided between crude and products.
❏ The demand for OPEC crude in 2009 is estimated at 29.0 mb/d, around 0.2 mb/d higher than in the previous report. This still represents a decline of around 2.2 mb/d compared to the previous year. In 2010, the demand from OPEC crude is expected to average 28.9 mb/d, around 0.2 mb/d higher than in the previous assessment and a decline of 40,000 b/d from a year earlier.
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OPEC's mission is to coordinate and unify the petroleum policies of Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry.
|Last Updated ( March 20 2010 )|
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