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
❏ OPEC Reference Basket remained broadly unchanged in February, declining a marginal 17¢ to $41.35/b.

Although, data shows a continued deterioration in the world economic situation and erosion in demand, government action to stimulate their economies and OPEC efforts to reduce the supply overhang have helped steady the market. The Basket remained relatively steady into March to stand at $42.14/b on 12 March.

❏ Global economic growth for 2008 has been revised down to 3.1% from 3.3% while the 2009 forecast has been adjusted downwards to show a contraction of 0.2% from positive growth of 0.4%.

The changes are mainly due to downward revisions in all world regions, in particularly OECD countries, with the exception of China and India. Although the US stimulus package has been approved, it is still unclear when and to what magnitude the impact will be felt. Key Asian countries are suffering from a large decline in exports. China exports declined by 25.7% y-o-y in February, extending the 17.5% decline in January.

❏ World oil demand growth in 2008 was revised down by 0.1 mb/d to minus 0.3 mb/d while the forecast for 2009 was cut by 0.4 mb/d to minus 1.0 mb/d. The revisions take into account the continued deterioration in the world economy and the accompanying erosion in demand growth.

Negative growth is expected to extend across all regions except the Middle East and China. OECD is expected to decline by 1.3 mb/d while non-OECD is projected to increase by only 0.3 mb/d.

❏ Non-OPEC oil supply is estimated to have fallen by 0.2 mb/d in 2008, broadly unchanged from the last report. In 2009, non-OPEC oil supply is projected to increase by 0.4 mb/d over the previous year, following a downward revision of 0.2 mb/d from the last assessment. This adjustment is mainly due to revisions to the forecasts for Mexico, UK, Norway and Russia.

OPEC crude oil production declined by 0.7 mb/d in February, according to secondary sources. OPEC NGLs and non-conventional oils are expected to average 4.8 mb/d in 2009, an increase of 0.4 mb/d over the previous year.

❏ Refinery glitches and gasoline stock draws especially in the US have temporarily provided support for the light distillates market, lifting the gasoline crack spread across the globe. With the approaching end of the winter season, refiners will be able to switch operations in favour of gasoline and thus remove any perceived tightness in gasoline supply.

Such circumstances along with increasing spare refining capacity should exert pressure on refining margins. Lower refining margins are likely to encourage refiners to cut runs, which could impact demand for crude in the coming months.

❏ OPEC spot fixtures were higher in February compared to the previous month. Both sailings from OPEC and arrivals in the US were lower. High tonnage availability on many key routes as a result of OPEC production adjustments and the ongoing global economic crisis continued to pressure the tanker market in February. In contrast, product freight rates were marginally higher in February supported by a very active East of Suez market.

❏ US commercial oil stocks fell 5.5 mb in February, but continued to show an overhang of 64 mb with the five-year average. The decline was due to products as crude oil continued to increase for the seventh month in a row on sluggish demand. European (EU-15 plus Norway) total oil stocks remained almost stable but were still 1% below their seasonal average. Japan’s commercial oil stocks fell for the third month in a row in January by a hefty 15.5 mb. However, preliminary data shows some recovery in February in both crude and products.

❏ The demand for OPEC crude in 2008 is estimated to average 30.9 mb/d, a decline of 0.5 mb/d from the previous year. In 2009, the demand for OPEC crude is expected to average 29.1 mb/d, a drop of 1.8 mb/d from a year earlier.

Oil Price Per Barrel

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Feature Article:
Economic uncertainties still overshadowing the oil 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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