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 decision in Oran appears to have halted the downward slide in prices to excessively low levels, despite a steady stream of negative economic and demand data. The OPEC Reference Basket rose $2.92/b or 7.6% in January to average $41.52/b, with prices remaining around the low $40/b range since the start of the year. Cold weather in Europe and the US revived demand for winter fuels improving refining margins. Geopolitical tensions and the disruption in Russian natural gas supplies also provided support earlier in the month. Basket prices remained relatively steady over the first half of February to stand at $41.79/b on 12 February.

❏ The forecast for the world economy was revised down 0.8 percentage points to 0.4%. This reflects the continuing deterioration in OECD economies where internal demand is failing to compensate for the significant shortfall in exports. The US labor-market continues to worsen with unemployment figures reaching a high of 7.6%. Although the US stimulus package is close to passage, it is still unclear the impact this might have. Key Asian countries are suffering from a large decline in exports, with Japan experiencing a 35% decline in December and China experiencing a 17.5% y-o-y decline in January.

❏ World oil demand in 2008 is estimated to have declined at a faster rate of 0.2 mb/d, representing a downward revision of 0.1 mb/d. Similarly, world oil demand in 2009 was revised down 0.4 mb/d to show a decline of 0.6 mb/d from the previous year. The revisions reflect the worsening economic situation in OECD countries which has spread to the emerging economies. The ongoing decline in industrial fuel consumption has been partially offset by colder-than-normal winter weather at the start of the year.

❏ Non-OPEC supply is now expected to have declined by 0.2 mb/d in 2008 following a downward revision of 230 tb/d on lower than expected performance in the US, Canada, China and Sudan. This marks the first decline in production since 1999. In 2009, non-OPEC oil supply is projected to increase by 0.5 mb/d following a minor downward revision. In January, total OPEC crude oil production averaged 28.71 mb/d, according to secondary sources, representing a decline of 959 tb/d from the previous month.

❏ Product market fundamentals are expected to remain weak over the medium-term, but cold winter weather temporarily provided support for product prices and refining margins. The current situation is likely to turn increasingly bearish with the approaching end of the winter season. The startup of new refining capacity in Asia and the continued slowdown in demand due to the economic crisis should only accelerate this trend. Seasonal refinery turnarounds are likely to exert further pressure on product prices over the coming months.

❏ OPEC spot fixtures increased in January over the previous month, while sailings from OPEC and arrivals in the US saw declines. Except for the VLCC sector which had vessels tied up as storage to take advantage of the deep contango structure in the forward market, spot freight rates for crude oil tankers declined in January impacted by the lower activity and reduced OPEC output. Product freight rates were also lower with East of Suez routes showing the largest drop.

❏ US commercial oil stocks surged a significant 27 mb in January to stand at 1,043 mb. Crude oil was the main contributor adding 23 mb or 0.74 mb/d. Following this build, the highest since April 2001, crude oil stocks now show an overhang of 45 mb with the five-year average. European (EU-15 plus Norway) total oil stocks fell 2.2 mb to 1,113 mb at end January while Japan’s commercial oil stocks continued to fall, declining 5.2 mb in December and further in January. Due to weakening demand, oil inventories remain at comfortable levels in Europe and Japan.

❏ The demand for OPEC crude in 2008 is estimated to have averaged 30.9 mb/d, a decline of 0.4 mb/d from the previous year. In 2009, the demand for OPEC crude is expected to average 29.2 mb/d, a drop of 1.7 mb/d from the year earlier.

Oil Price Per Barrel

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Download OPEC Monthly Oil Market Report, February 2009

PDF format, 799KB, 68Pages.

Feature Article:
Persistent inventory overhang challenges market
Oil market highlights
Feature article
Crude oil price movements
The oil futures market
Commodity markets
Highlights of the world economy
World oil demand
World oil supply
Product markets and refinery operations
The tanker market
Oil trade
Stock movements
Balance of supply and demand

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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.

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