Oil Market Report - 2013 Archives

CROUCHING TIGER, HIDDEN DRAGON

MARKET OVERVIEW

Crude Oil Prices

• Crude oil prices increased towards the end of 2012 and into early January 2013, driven by stronger winter demand and geopolitical concerns.
• By mid-January, Brent prices were trading at $110.75 per barrel (bbl), and WTI was around $95.15 per barrel.

Global Demand

• The world is forecast to consume 90.8 million barrels per day (mb/d) of oil in 2013, an increase of 240,000 barrels per day (kb/d) from the previous month's report and 930,000 barrels per day (kb/d) or 1.0% higher than in 2012.
• The increase is primarily due to a higher fourth quarter (4Q) 2012 demand estimate and heightened expectations for China.

Global Supplies

• Global supplies fell by 170,000 barrels per day (kb/d) in December to 91.2 million barrels per day (mb/d).
• Non-OPEC production rebounded by 90,000 barrels per day (kb/d) from the prior month, reaching 54.2 mb/d and is expected to increase by 590,000 barrels per day (kb/d) in the first quarter (1Q) of 2013 compared to the same period last year.
• For 2013, non-OPEC production is projected to rise by 980,000 barrels per day (kb/d) to 54.3 mb/d, the highest growth rate since 2010.

OPEC Crude Supply

• OPEC crude supply fell to its lowest level in a year at 30.65 mb/d in December, mainly due to lower output from Saudi Arabia and Iraq.
• Average OPEC crude output reached a historical high in 2012 due to continued global demand growth.
• The 'call on OPEC crude and stock change' for 2013 was raised by 100,000 barrels per day (kb/d) to 30 mb/d.

OECD Industry Inventories

• OECD industry inventories decreased by 18.7 million barrels (mb) in November, primarily due to a further drop of 11 million barrels in middle distillate stocks.
• Total products cover fell by 0.5 days to 30 days in November.
• Preliminary December data indicate a further decrease of 18.4 million barrels in OECD industry inventories.

Refining

• Global refinery runs rose by 1.5 million barrels per day (mb/d) year-over-year (y-o-y) to around 75.9 mb/d in the fourth quarter (4Q) of 2012.
• Growth in refining activity was concentrated in China, India, and Russia.
• Favorable refining margins, a gradual reduction in offline capacity, and a cold snap in Asia and the FSU supported refinery throughputs in the last months of 2012.

Summary

The oil market in early 2013 shows a mixed picture with rising prices and increasing demand, but also declining inventories and a slowdown in OPEC supply. Non-OPEC countries are expected to play a significant role in meeting the growing demand, with strong performance in regions like China and Russia.