In May, the OPEC Reference Basket (ORB) declined by $5.53, or 6.2%, m-o-m, to average $83.59/b. Oil futures prices declined, with the ICE Brent front-month contract falling by $6.00, or 6.7%, m-o-m, to average $83.00/b, and the NYMEX WTI front-month contract falling $5.77, or 6.8%, to average $78.62/b. The DME Oman front-month contract fell by $5.63, or 6.3%, m-o-m, to average $83.74/b. The front-month ICE Brent/NYMEX WTI spread narrowed by 23¢ to average $4.38/b. The price structure of ICE Brent and NYMEX WTI weakened and money managers were bearish amid heavy selling. The premium of light sweet to medium sour crudes narrowed further across all major trading hubs on a weaker light sweet market.

The world economic growth forecasts for 2024 and 2025 remained unchanged at 2.8% and 2.9%, respectively. For US, the economic growth forecasts for 2024 and 2025 remained unchanged at 2.2% and 1.9%, respectively. The economic growth forecast for the Eurozone remained unchanged at 0.5% for 2024 and 1.2% for 2025. Japan’s economic growth forecasts are revised down to 0.3% in 2024 and 0.9% in 2025. China’s economic growth forecasts remained at 4.8% in 2024 and 4.6% in 2025. India’s economic growth forecasts remained unchanged at 6.6% for 2024 and 6.3% for 2025. Brazil’s economic growth forecast is revised up to 1.8% for 2024 but remained unchanged at 1.9% for 2025. Russia’s economic growth for 2024 is revised up to 2.9%, while the forecast for 2025 remained unchanged at 1.4%.

The global oil demand growth forecast for 2024 remained unchanged from last month’s estimates at 2.2 mb/d. There were some minor downward adjustments for 1Q24 due to actual data from the OECD, more specifically Europe and Asia Pacific. This was offset by a better-than-expected performance in the non-OECD in 1Q24. Accordingly, OECD oil demand is now expected to grow by 0.2 mb/d while the non-OECD forecast remains at 2.0 mb/d. In 2025, global oil demand is expected to see robust growth of 1.8 mb/d, y-o-y, unchanged from the previous month’s assessment. The OECD is expected to grow by 0.1 mb/d, y-o-y, while demand in the non-OECD is forecast to increase by 1.7 mb/d.

The non-Declaration of Cooperation (DoC) liquids supply (i.e., liquids supply from countries not participating in the DoC) is expected to grow by 1.2 mb/d in 2024, unchanged from the previous month’s assessment. The main drivers for growth are expected to be the US, Canada, Brazil and Norway. In 2025, non-DoC liquids supply growth is expected at 1.1 mb/d, unchanged from the previous month’s assessment. The growth is expected to be mainly driven by the US, Brazil, Canada and Norway. Separately, DoC natural gas liquids (NGLs) and non-conventional liquids are forecast to grow by about 0.1 mb/d to average 8.3 mb/d this year, followed by an increase of 20 tb/d to average 8.3 mb/d in 2025. The DoC-22 crude oil production in May dropped by 123 tb/d, m-o-m, averaging 40.92 mb/d, as reported by available secondary sources.

In May, refinery margins eased further in all main trading hubs for the third consecutive month, as an ongoing recovery in refinery processing rates led to product stock builds. Gasoline was the main driver of weakness across the barrel in all regions, with ample availability amid heightened production following the conclusion of heavy maintenance and the start of the summer season. Softening economic incentives for East-to-West flows due to weakening export margins and strong gasoline imports from the Middle East weighed on Asian product markets despite strengthening Asian naphtha and fuel oil crack spreads. Global refinery intake increased by 490 tb/d in May to average 80.5 mb/d, compared with 80.0 mb/d the previous month, and was 106 tb/d higher, y-o-y.

Dirty spot freight rates showed mixed movement in May, with VLCCs and Aframax generally improving while Suezmax experienced a decline m-o-m. VLCC spot freight rates on the Middle East-to-East route rose by 10%, m-o-m, while the West Africa-to-East route rose by 11%. Aframax rates around the Mediterranean rose by 10% in May, while the Indonesia-to-East route was up 6%. In contrast, Suezmax spot freight rates declined, dropping by 8%, m-o-m, on the US Gulf-to-Europe route. Rates for clean tankers were higher across all monitored routes in May, with East of Suez rates up by 10% and West of Suez rates gaining 3%.

US crude imports rose to a six-month high in May, averaging almost 6.8 mb/d ahead of the summer driving season, according to preliminary data. US crude exports also increased during the month to average 4.4 mb/d, representing a y-o-y gain of over 15%. Meanwhile, US product imports declined by 2% to average 2.1 mb/d, while product exports also fell by about 2% to average 6.5 mb/d, although this still represents an 11% y-o-y gain. The latest complete data for China shows crude imports in April with a seasonal decline of almost 6% to average 10.9 mb/d, while product imports reached a record high of 2.5 mb/d, supported by higher inflows of fuel oil. India’s crude imports in April hit a two-year high of 5.2 mb/d, while product imports were the highest in six months at just under 1.3 mb/d. This was ahead of national elections, which were seen boosting transportation demand. In Japan, crude imports partly recovered from the weak performance in 1Q24 to average 2.6 mb/d, while product inflows also recovered. Preliminary estimates indicate OECD Europe crude imports were slightly lower in May, as higher inflows from North America were outpaced by declines from other key regions.

Preliminary April 2024 data shows total OECD commercial oil stocks were up by 16.6 mb, m-o-m. At 2,773 mb, they were 154 mb below the 2015–2019 average. Within the components, crude stocks rose by 19.5 mb, while product stocks fell by 2.9 mb, m-o-m, respectively. OECD commercial crude stocks stood at 1,376 mb, which is 96 mb less than the 2015–2019 average. OECD total product stocks in April stood at 1,396 mb. This is 58 mb lower than the 2015–2019 average. In terms of days of forward cover, OECD commercial stocks increased in April by 0.1 days, m-o-m, to stand at 60.1 days. This is 2.2 days lower than the 2015–2019 average.

Demand for DoC crude (i.e., crude from countries participating in the DoC) remains unchanged from the previous month’s assessment to stand at about 43.2 mb/d in 2024, which is around 0.9 mb/d higher than the estimated level for 2023. Demand for DoC crude in 2025 remains unchanged from the previous month’s assessment to stand at 43.9 mb/d, around 0.7 mb/d higher than the estimate for 2024.