In February, the ORB dropped 5% m-o-m, lower for the first time in six months, to average $63.48/b, but remains above levels seen in more than two years. Year-to-date, the ORB was 23.4%, or $12.37, higher than seen in the same period a year earlier, at $65.25/b. Similarly, Dated Brent dropped by $3.97 m-o-m to average $65.16/b and spot WTI declined by $1.55 to average $62.15/b. Oil futures also ended lower, but by varying amounts. The sell-off in crude oil futures started early in the month with oil prices pulled lower, as major US stock markets declined sharply and the dollar firmed. The ICE Brent was $3.35, or 4.8%, lower, at $65.73/b, while NYMEX WTI slipped $1.48, or 2.3%, to $62.18/b compared to a month earlier. Year-to-date, ICE Brent was $11.77 higher than the same period a year earlier at $67.48/b, while NYMEX WTI rose by $9.93 to $62.96/b. The Brent-WTI spread narrowed significantly to around $3/b by the end of the month, on steep declines in inventories in Cushing, Oklahoma. Hedge funds reduced net long positions in ICE Brent and NYMEX WTI to 1.01 million contracts. Brent and Dubai backwardation eased, while that of WTI strengthened. The sweet-sour differentials narrowed globally, except in Europe.
The global GDP growth forecast remains at 3.8% for both 2017 and 2018. US growth is expected to stand unchanged at 2.7% in 2018, after growth of 2.3% in 2017. Growth in the Euro-zone is expected to remain at 2.2% in 2018, following growth of 2.5% in 2017. Japan's 2018 growth forecast is revised down to 1.5%, after actual growth of 1.7% in 2017. India's GDP growth forecast remains unchanged at 7.2% in 2018, higher than actual growth for 2017 at 6.4%. China's GDP growth is projected to remain at 6.5% in 2018, after reported growth of 6.9% in 2017.
In 2017, world oil demand growth is revised higher by 23 tb/d from February's assessment to reflect the latest data. Total world oil demand growth for 2017 is now pegged at 1.62 mb/d, averaging 97.04 mb/d. For 2018, oil demand growth is now forecasted at around 1.60 mb/d, marginally higher than February's projections, with total oil demand at 98.63 mb/d. Oil demand growth in the OECD region was revised higher in 1Q18, now showing growth of 0.32 mb/d for 2018. In the non-OECD region, growth projections were also adjusted higher by 20 tb/d in 1Q18, now showing growth of 1.27 mb/d in 2018.
For 2017, non-OPEC supply is revised up slightly by 0.01 mb/d from February's assessment, mainly due to higher-than-expected output growth in 4Q17, representing growth of 0.87 mb/d y-o-y. For 2018,
non-OPEC supply is revised up by 0.28 mb/d, representing y-o-y growth of 1.66 mb/d, with total
non-OPEC supply reading 59.53 mb/d. The upward revision is mainly due to higher-than-expected output in 1Q18 by 360 tb/d in OECD (Americas and Europe), FSU and China. OPEC NGLs are now expected to grow by 0.18 mb/d in 2018, following 0.17 mb/d a year earlier. According to secondary sources, OPEC crude production decreased by 77 tb/d in February 2018, averaging 32.19 mb/d.
Product markets in all main trading hubs showed positive results last month, mainly driven by improved fundamentals. In the US, and despite losses seen through most of the month, refinery margins showed outstanding seasonal y-o-y growth on strong support from gasoline and diesel stocks, which fell by 0.8 mb/d and 0.6 mb/d, respectively, in the last week of the month, due to refinery maintenance. In Europe, product markets strengthened, supported by higher gasoline demand and improved fuel oil export opportunities. Similarly, product markets in Asia recorded gains all across the barrel, except in the diesel complex. Support came from higher product demand, in line with seasonal trends, and higher heating requirements due to colder weather in northeast Asia, amid firm jet fuel demand.
Tanker market spot freight rates continued to drop as seen in the previous months. Average dirty tanker spot freight rates declined further by 6% in February. Lower rates were seen in all reported dirty classes as limited tonnage demand and lengthy tonnage lists prevented rates from rising in several regions, despite some weather and ports delays. The clean tanker market was mostly quiet in February and spot freight rates were generally weak, due to holidays and insufficient activity despite cold weather and occasional delays.
Preliminary data for January showed that total OECD commercial stocks rose by 13.7 mb m-o-m to stand at 2,865 mb, which is 50 mb above the latest five-year average. Crude stocks indicated a surplus of 74 mb, while product stocks witnessed a deficit of 24 mb to the seasonal norm. In terms of days of forward cover, OECD commercial stocks fell slightly in January to stand at 60 days, which is 0.6 days lower than the last five-year average.
In 2017, demand for OPEC crude is estimated to remain unchanged to stand at 32.9 mb/d, 0.6 mb/d higher than the 2016 level. In 2018, demand for OPEC crude is forecast at 32.6 mb/d, down by 0.2 mb/d from the previous assessment and 0.2 m/d lower than a year earlier.