Summary
Crude Oil Price Movements
In February, the OPEC Reference Basket (ORB) rose by $1.19, or 1.5%, m-o-m, to average $81.23/b. Oil futures prices averaged higher, with the ICE Brent front-month contract up by $2.57, or 3.2%, m-o-m, to average $81.72/b, and the NYMEX WTI front-month contract up by $2.75, or 3.7%, m-o-m, to average $76.61/b. The DME Oman front-month contract rose by $2.00, or 2.5%, m-o-m, to settle at $80.95/b. The front-month ICE Brent/NYMEX WTI spread further narrowed in February by 18¢ to average $5.11/b. The market structures of oil futures prices strengthened and money managers turned more bullish on oil.
World Economy
The world economic growth forecast for 2024 is revised up slightly to stand at 2.8%, with economic growth forecast unchanged at 2.9% for 2025. In the United States, economic growth for 2024 is revised up to 1.9%, as the healthy momentum from 2H23 is expected to continue, while the forecast for 2025 remains at 1.7%. The economic growth forecast for the Eurozone remains at 0.5% for 2024 and 1.2% for 2025, while Japan’s economic growth forecast is revised down to 0.8% in 2024, followed by 1% in 2025. China’s economic growth forecast remains at 4.8% in 2024 and 4.6% in 2025. Meanwhile, India’s economic growth forecast is revised up to 6.6% for 2024 and 6.3% in 2025. Brazil’s economic growth forecast for 2024 is revised up to 1.6%, while the forecast for 2025 remains unchanged at 1.9%. Russia’s economic growth forecasts for 2024 and 2025 remain unchanged at 1.7% and 1.2%, respectively.
World Oil Demand
The 2024 global oil demand growth forecast remains unchanged at 2.2 mb/d, y-o-y. Oil demand growth in OECD Asia Pacific is revised down slightly for 1Q24, due to expected lower performance in the manufacturing and petrochemical sectors of Japan and South Korea. However, this is offset by upward adjustments for India and Other Asia, reflecting anticipated improvements during the same period. With this, the OECD is forecast to expand by around 0.2 mb/d, and non-OECD by 2.0 mb/d this year. In 2025, global oil demand is forecast to grow by 1.8 mb/d, y-o-y, unchanged from last month's assessment, with the OECD growing by 0.1 mb/d and non-OECD by 1.7 mb/d.
World Oil Supply
The non-OPEC liquids production in 2024 is expected to grow by 1.1 mb/d, slightly revised down from the previous month’s assessment. The revision takes into account the recently announced additional voluntary production adjustments by some countries in the Declaration of Cooperation (DoC) in 2Q24 and the rest of 2024. In 2024, the main drivers for liquids supply growth are expected to be the US, Canada, Brazil and Norway, while the largest declines are anticipated in Russia and Mexico. The forecast for non-OPEC liquids supply growth in 2025 stands at 1.4 mb/d, revised up from the previous month mainly due to the base changes made in 2024. The growth is mainly driven by the US, Brazil, Canada, Russia, Kazakhstan and Norway. Separately, OPEC natural gas liquids (NGLs) and non-conventional liquids are forecast to grow by around 64 tb/d to average 5.5 mb/d this year, followed by a growth of 110 tb/d to average 5.6 mb/d in 2025. OPEC-12 crude oil production in February increased by 203 tb/d, m-o-m, averaging 26.57 mb/d, as reported by available secondary sources.
Product Markets and Refining Operations
In February, refinery margins across all regions strengthened further, as ongoing refinery maintenance limited processing rates and restricted product output, exerting downward pressure on product stocks. The gains were mostly driven by stronger gasoline markets, reflecting reduced products’ availability and a positive gasoline market outlook for the coming months. Additionally, gasoil performance improvements in Northwest Europe further supported refining economics, with the products’ crack spread facing upward pressure amid declines in refinery runs, which exacerbated the products’ balance contraction given ongoing geopolitical tensions. Global refinery intake fell by 958 tb/d, averaging 79.9 mb/d vs. 80.8 mb/d in the previous month, showing a 434 tb/d decline, y-o-y. Refinery intakes are expected to remain under pressure in the coming months amid heavy turnaround works.
Tanker Market
Dirty freight rates recovered further in February on all monitored routes, with the Middle East-to-East route leading gains. On average, VLCC spot freight rates rose 11%, m-o-m. Compared with the same month of 2023, VLCC rates were 18% higher. Suezmax spot freight rates gave up the gains of the previous month dropping 19%, m-o-m, while Aframax rates saw a large decline of 18%, m-o-m, across all routes. Clean tanker spot freight rates saw an increase, with East of Suez rates surging by 18%, m-o-m, as trade disruptions triggered some rebooking. West of Suez rates also jumped by 22%, m-o-m, in February.
Crude and Refined Products Trade
Preliminary data shows that US crude imports averaged 6.5 mb/d in February, marking an increase of over 3%, m-o-m, while US crude exports remained at a relatively healthy level, averaging 4.6 mb/d. China's crude imports averaged 11.2 mb/d in January, representing a decline of 1.8%, m-o-m. India's crude imports in January witnessed a 9.4% increase, m-o-m, reaching 5.1 mb/d supported by seasonal trends. Japan's crude imports in January fell by 8.6%, m-o-m, standing at 2.4 mb/d. Compared to the same month of 2023, crude inflows declined by 10.8%. Crude imports into OECD Europe are expected to fluctuate, with inflows strengthening in December before declining in January and February.
Commercial Stock Movements
Preliminary January 2024 data shows total OECD commercial oil stocks down by 26.8 mb, m-o-m. At 2,735 mb, they were 192 mb below the 2015–2019 average. Within the components, crude and product stocks fell by 10.7 mb and 16.1 mb, m-o-m, respectively. OECD commercial crude stocks stood at 1,318 mb in January, 113 mb lower than the 2015–2019 average. OECD total product stocks in January stood at 1,416 mb, 79 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial stocks dropped by 0.9 days, m-o-m, in January 2024 to stand at 59.6 days. This is 2.4 days less than the 2015–2019 average.
Balance of Supply and Demand
Demand for OPEC crude in 2024 is projected to stand at about 28.5 mb/d, which is 1.1 mb/d higher than the estimated level for 2023. Demand for OPEC crude in 2025 is expected to reach about 28.8 mb/d, an increase of about 0.3 mb/d over the forecast 2024 level.
