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The OPEC Monthly Oil Market Report (MOMR) for December released Wednesday provides OPEC's outlook for crude oil market developments for the coming year with key developments impacting oil market trends in world oil demand and supply.

 OPEC MOMR Header

MOMR Highlights

  • Global oil demand growth was unchanged, despite some upward revisions to the Middle East in 3Q19 and 4Q19 offset by downward revision in OECD Americas, mainly to reflect weaker-than-expected demand in OECD Americas during 2Q19 and 3Q19.
  • Global oil demand growth is estimated at 0.98 mb/d. In 2020, oil demand growth is forecast at 1.08 mb/d, also unchanged from the last month’s report.
  • Other Asia and China are assumed to be the largest contributors to oil demand growth with a combined addition of 0.68 mb/d.
  • Non-OPEC oil supply growth for 2019 remains at 1.82 mb/d y-o-y, as higher-than-expected oil production in Canada, the UK and Kazakhstan, was offset by downward adjusted production data for the US, and Indonesia, among others.
  • The US, Brazil, China, the UK, Australia and Canada are the key drivers of growth in 2019 while Mexico and Norway are projected to see the largest declines.
  • Non-OPEC oil supply growth in 2020 was revised down by 36 tb/d from last month’s assessment and is now forecast to grow by 2.17 mb/d, mainly due to the US, which was revised down by 33 tb/d to now show growth of 1.5 mb/d for the year. 
  • In October, OPEC crude oil production increased by 943 tb/d to average 29.65 mb/d, according to secondary sources.
  • Demand for OPEC crude in 2019 was unchanged from the previous report to stand at 30.7 mb/d, which is 0.9 mb/d lower than the 2018 level.
  • Demand for OPEC crude in 2020 also remained unchanged from the previous report to stand at 29.6 mb/d, which is around 1.1 mb/d lower than the 2019 level.

 

Oil Market Highlights

 

  • World oil demand growth expected at 0.98 mb/d in 2019, unchanged from last month.
  • OECD Americas is estimated to lead oil demand growth as a result of steady light distillate requirements.
  • China is assessed to lead demand growth globally, as well as within non-OECD countries, in response to steady petrochemical feedstock demand for transportation fuels
  • Non-OPEC oil supply growth forecast for 2019 remains at 1.82 mb/d, unchanged from last month
  • The US liquids supply growth also remains unchanged at 1.62 mb/d, the upward revision in 3Q19 is now offset by a lower estimate for 4Q19.
  • Upward revision in the UK’s oil supply forecast is offset by a downward revision in Russia.
  • The 2020 non-OPEC supply forecast remains subject to some uncertainties, including the degree of spending discipline by US independent oil companies.
  • For 2019, the US, Brazil and Canada remain to be the key drivers for growth, and this will continue in 2020 with the addition of Norway. 
  • OPEC crude oil production dropped by 193 tb/d m-o-m to average 29.55 mb/d, according to secondary sources.

 

OPEC Monthly Oil Market Report November 2019
 

Crude Oil Price Movements

The OPEC Reference Basket (ORB) price rose by $3.03, or 5.1%, month-on-month (m-o-m) in November settling at $62.94/b. In November, ICE Brent averaged $3.08, or 5.2%, higher m-o-m at $62.71/b, while NYMEX WTI rose by $3.06, or 5.7%, m-o-m averaging $57.07/b. Year-to-date (y-t-d), ICE Brent averaged $8.79, or 12.1%, lower at $64.08/b, while NYMEX WTI declined by $9.48, or 14.3%, to $56.79/b, both compared to the same period a year earlier. The backwardation price structures of both ICE Brent and DME Oman steepened further in November, particularly in prompt forward months, while the NYMEX WTI market structure slipped into backwardation for most of the month. Hedge funds and other money managers raised their speculative net long positions, reflecting a more positive outlook for the global oil market.

World Economy

The global economic growth forecast remains at 3.0% for both 2019 and 2020. US growth remains at 2.3% for 2019 and 1.8% for 2020. Euro-zone growth remains at 1.2% for 2019 and 1.0% for 2020. Japan’s growth forecast is unchanged at 0.9% for 2019, but revised up to 0.6% for 2020, considering a forecast positive net effect from the announced fiscal stimulus. China’s growth forecast is unchanged, standing at 6.2% for 2019 and 5.9% for 2020. India’s growth forecast is revised down to 5.5% for 2019 and to 6.4% for 2020, after less-than-expected growth in the first three quarters of 2019. Both Brazil’s and Russia’s forecasts are revised up slightly, after both economies continued accelerating in 3Q19. Brazil’s 2019 growth forecast is revised up to 1.0% for 2019 and to 1.7% for 2020. Similarly, Russia’s forecast is revised up to 1.1% for 2019 and 1.3% for 2020.

World Oil Demand

World oil demand growth is expected at 0.98 mb/d in 2019, unchanged from last month’s report. In the OECD region, OECD Americas is estimated to lead oil demand growth as a result of steady light distillate requirements. China is assessed to lead demand growth globally, as well as within non-OECD countries, in response to steady petrochemical feedstock demand for transportation fuels. In 2020, world oil demand is forecast to increase by 1.08 mb/d, also in line with last month projections. Oil demand growth is forecast to originate largely from Other Asia, followed by China. OECD countries are projected to consume an additional 0.07 mb/d as compared to the current year, while non-OECD countries are expected to remain the driver for oil demand growth in 2020, adding an estimated 1.01 mb/d.

World Oil Supply

Non-OPEC oil supply growth forecast for 2019 remains at 1.82 mb/d, unchanged from last month’s report. The US liquids supply growth also remains unchanged at 1.62 mb/d, the an upward revision in 3Q19 is now offset by a lower estimate for 4Q19. Similarly, the non-OPEC oil supply growth forecast for 2020 remains unchanged from last month’s forecast at 2.17 mb/d. An upward revision in the UK’s oil supply forecast is offset by a downward revision in Russia. The 2020 non-OPEC supply forecast remains subject to some uncertainties, including the degree of spending discipline by US independent oil companies. For 2019, the US, Brazil and Canada remain to be the key drivers for growth, and this will continue in 2020 with the addition of Norway. OPEC NGLs production in 2019 is estimated to have grown by 0.04 mb/d to average 4.80 mb/d and in 2020 is forecast to grow to average 4.83 mb/d. In November, OPEC crude oil production dropped by 193 tb/d m-o-m to average 29.55 mb/d, according to secondary sources.

Product Markets and Refining Operations

Product markets in November lost solid ground as refinery intakes recovered, following peak refinery maintenance which led to higher product availability and contributed to a trend reversal of refinery margins in all main trading hubs. Higher feedstock prices and weaker fuel oil cracks affected by high freight rates weighed further on product markets, particularly in Asia, where refining economics fell sharply to a multi-year record low and entered negative territory

Tanker Movements

Dirty tanker spot freight rates in November remained at robust levels relative to their performance seen for most of this year, although down from the record highs of the previous month. Indeed, October’s announcement of sanctions on two subsidiaries of a China’s shipping giant, Cosco, surprised the market at a time of seasonal uplift in demand for longer-haul voyages and reduced tonnage availability due to IMO preparations, leading to panic fixing and a sharp spike in rates. As the panic subsided in November and as the market regained balance, rates retreated but remained close to the elevated levels seen in the same month last year. Clean tanker rates also enjoyed a similar upward trend and even managed to retain gains to stand well above the levels achieved this time last year.

Stock Movements

Preliminary data for October showed that total OECD commercial oil stocks fell by 5.1 mb m-o-m to stand at 2,933 mb, which is 82.5 mb higher than the same time one year ago, and 32.8 mb above the latest five-year average. Within the components, crude stocks rose by 18.9 mb m-o-m to stand at 18.3 mb above the latest five-year average, while product stocks decreased by 23.9 mb m-o-m to stand at 14.5 mb above the latest five-year average. In terms of days of forward cover, OECD commercial stocks rose by 0.6 days m-o-m in October to stand at 61.2 days, which is 1.8 days above the same period in 2018, but 0.2 days below the latest five-year average.

Balance of Supply and Demand

Demand for OPEC crude in 2019 was unchanged from the previous report to stand at 30.7 mb/d, which is 0.9 mb/d lower than the 2018 level. Demand for OPEC crude in 2020 also remained unchanged from the previous report to stand at 29.6 mb/d, which is around 1.1 mb/d lower than the 2019 level

OPEC News Release 11 December 2019

From The Traders Community News Desk

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