Oil Market Report - 2015 Archives

HIGHLIGHTS

• Oil Prices: Oil prices continued to decline in January, with Brent crude futures trading at $48.40/bbl, close to a six-year low. NYMEX WTI was at $47.75/bbl.

• Macroeconomic Weakness: Macroeconomic conditions remain weak, restraining global oil demand growth. In Q4 2014, deliveries were estimated to be just 0.6 mb/d above year-earlier levels. Demand growth is forecasted to accelerate to 0.9 mb/d in 2015, unchanged from the previous month's report.

• Supply Adjustments: The oil sell-off has reduced expectations of 2015 non-OPEC supply growth by 350 kb/d, now projected at 950 kb/d. North American supply is currently limited to 95 kb/d and 80 kb/d for Canada and the US, respectively. Projections for Colombia and Russia have been cut by 175 kb/d and 30 kb/d, respectively.

• OPEC Output: OPEC output rose by 80 kb/d in December to 30.48 mb/d, driven by Iraqi supply reaching 35-year highs, offsetting losses in Libya. The non-OPEC supply outlook has been revised downward, raising the 'call' on OPEC for H2 2015 to an average of 29.8 mb/d, just shy of OPEC's official target of 30 mb/d.

• Refineries: Global refinery crude throughput reached a new record high of 78.9 mb/d in December, but is expected to ease seasonally to 77.8 mb/d in Q1 2015 due to brimming product inventories, weakening margins, lower demand, and increased refinery maintenance.

• OECD Inventories: OECD commercial inventories fell by 8.7 mb to 2,697 mb in November. Preliminary data suggest a 12.5 mb build in December, bringing stocks to their widest surplus versus the five-year average since August 2010.

WHAT NOW?

The ongoing supply and demand dynamics will continue to shape the oil market. With OPEC maintaining its production targets and non-OPEC supply projections being revised downward, the balance between supply and demand will be critical in determining future price movements. Refinery throughput and inventory levels will also play significant roles in the short-term outlook.

DEMAND

• Global Overview: Macroeconomic weakness continues to constrain global oil demand growth. Deliveries in Q4 2014 were estimated at 0.6 mb/d above year-earlier levels. Demand growth is forecast to accelerate to 0.9 mb/d in 2015.

• OECD: OECD commercial inventories fell by 8.7 mb to 2,697 mb in November. Refiners increased runs, causing crude stocks to draw while product stocks increased.

• Americas: Refinery throughput is expected to ease seasonally to 77.8 mb/d in Q1 2015 due to brimming product inventories, weaker margins, lower demand, and increased refinery maintenance.

• Europe: Refinery throughput is expected to ease seasonally to 77.8 mb/d in Q1 2015 due to brimming product inventories, weaker margins, lower demand, and increased refinery maintenance.

• Asia Oceania: Refinery throughput is expected to ease seasonally to 77.8 mb/d in Q1 2015 due to brimming product inventories, weaker margins, lower demand, and increased refinery maintenance.

• Non-OECD: Refinery throughput is expected to ease seasonally to 77.8 mb/d in Q1 2015 due to brimming product inventories, weaker margins, lower demand, and increased refinery maintenance.

SUPPLY

• Summary: OPEC output rose by 80 kb/d in December to 30.48 mb/d, driven by Iraqi supply reaching 35-year highs, offsetting losses in Libya. The non-OPEC supply outlook has been revised downward, raising the 'call' on OPEC for H2 2015 to an average of 29.8 mb/d, just shy of OPEC's official target of 30 mb/d.

• OPEC Crude Oil Supply: OPEC output rose by 80 kb/d in December to 30.48 mb/d, driven by Iraqi supply reaching 35-year highs, offsetting losses in Libya.

• Non-OPEC Overview: Non-OPEC supply is projected to grow by 950 kb/d in 2015, down from previous projections of 1,300 kb/d