In April, the OPEC Reference Basket (ORB) increased by $5.68, or 7.2%, m-o-m to average $84.13/b. The ICE Brent front-month contract rose by $4.16, or 5.3%, m-o-m to $83.37/b, and the NYMEX WTI front-month contract increased by $6.07, or 8.3%, m-o-m to average $79.44/b. The DME Oman front-month contract rose by $5.13, or 6.5%, m-o-m to settle at $83.47/b. The front-month ICE Brent/NYMEX WTI spread narrowed by $1.91 m-o-m to average $3.93/b. The futures forward curves of ICE Brent, NYMEX WTI and DME Oman strengthened across the month. Hedge funds and other money managers raised bullish positions in ICE Brent and NYMEX WTI in April.
World economic growth is estimated at 3.3% for 2022 and forecast at 2.6% for 2023, both unchanged from the previous month’s assessment. The global economy continues to navigate through challenges including high inflation, higher interest rates in the US and the Euro-zone, and high debt levels in many regions. The US economic growth forecast for 2023 remains unchanged at 1.2%, following growth of 2.1% for 2022. The Euro-zone’s economic growth forecast for 2023 remains at 0.8%, after growth of 3.5% for 2022. Japan’s economic growth forecast for 2022 remains at 1.0% for both 2022 and 2023. China’s economic growth forecast remains at 5.2% for 2023, compared with 3% for 2022. India’s 2022 economic growth estimate is unchanged at 6.7%, and the forecast for 2023 remains at 5.6%. Brazil’s economic growth estimates for 2022 and 2023 are unchanged at 2.9% and 1.0%, respectively. Russia’s growth is also unchanged across both years, with an estimated contraction of 2.1% for 2022 and a smaller forecast contraction of 0.5% for 2023.
The world oil demand estimate for 2022 remains unchanged from last month’s assessment, with a growth of 2.5 mb/d y-o-y. In the OECD, oil demand was adjusted slightly downward in the 4Q22, amid data showing a demand decline in OECD Americas. This was entirely offset by a slight upward revision to the estimation for non-OECD countries. For 2023, the forecast for world oil demand growth remains broadly unchanged at 2.3 mb/d, with the OECD projected to grow by almost 0.1 mb/d and the non-OECD expected to grow by about 2.3 mb/d. Within the regions, slight downward adjustments in 1Q23 for the OECD were offset by upward revisions to the non-OECD.
Non-OPEC liquids supply is estimated to have grown by 1.9 mb/d in 2022, broadly unchanged from the previous month’s assessment. The main drivers of liquids supply growth for 2022 were the US, Russia, Canada, Guyana, China and Brazil, while the largest declines were seen in Norway and Thailand. For 2023, the forecast for
non-OPEC liquids production growth also remained unchanged from last month’s assessment, at 1.4 mb/d, y-o-y. The main drivers of liquids supply growth are expected to be the US, Brazil, Norway, Canada, Kazakhstan and Guyana, while declines are expected primarily in Russia. Uncertainties remain, primarily related to the potential of US shale oil output and unplanned field maintenance in 2023. OPEC NGLs and non-conventional liquids are estimated to have grown by 0.1 mb/d in 2022, to average 5.39 mb/d, and are forecast to grow by 50 tb/d to average 5.44 mb/d in 2023. OPEC-13 crude oil production in April decreased by 191 tb/d m-o-m to average 28.60 mb/d, according to available secondary sources.
Refinery margins dropped to their lowest level to date in April, following mild gains in the previous month. Product output in the Atlantic Basin rose as refinery runs recovered and the peak maintenance season approached an end. Moreover, weaker US diesel export opportunities, amid expectations of ample middle distillate arrivals into Europe, weighed on product markets and crack spreads. In Asia, softening product exports contributed to weakness across the barrel except for residual fuel, which benefitted from firm domestic requirements and lower imports. Global refinery processing rates recovered in April, gaining 918 tb/d, according to preliminary estimates.
Dirty freight rates experienced a correction in April across all reported routes. Aframax saw the sharpest downturn, falling by as much as 66% on the Caribbean-to-US East Coast route. Suezmax spot freight rates were next, with rates on the US Gulf Coast-to-Europe route down 36%. VLCC rates also declined, down 24% on the Middle East-to-East route and 23% lower on the West Africa-to-East route. Clean spot freight rates showed a mix performance, with a weaker market West of Suez outweighing the strong performance
East of Suez.
Preliminary data shows US crude imports increased to 6.3 mb/d in April amid preparations for the summer driving season. US crude exports fell back from a record high to average a still strong 4.2 mb/d. In March, China’s crude imports surged to a new record high of 12.4 mb/d following a wave of buying by Chinese refiners, including from long-haul sources. China’s product exports declined in March from high levels to an average of 1.3 mb/d, with declines across light and middle distillates. India’s crude imports fell from a 10-month high, averaging just under 4.9 mb/d in March. India’s product exports strengthened further, averaging 1.5 mb/d. Japan’s crude imports were 8% lower in March, averaging 2.5 mb/d. Japan’s product exports, including LPG, came off a strong performance the month before to average 567 tb/d in March. Preliminary estimates for April show OECD Europe crude imports were seasonally lower, while product imports picked up from lower levels in February and March, led by diesel.
Preliminary March 2023 data shows total OECD commercial oil stocks fell m-o-m by 31.7 mb. At 2,808 mb, they were 195 mb higher than the same time one year ago, but 34 mb lower than the latest five-year average and 105 mb below the 2015–2019 average. Within components, crude and product stocks decreased m-o-m by 4.9 mb and 26.8 mb, respectively. At 1,402 mb, OECD crude stocks were 119 mb higher than the same time a year ago and 2 mb higher than the latest five-year average. However, at this level, they were 60 mb lower than the 2015–2019 average. OECD product stocks stood at 1,406 mb, representing a surplus of 76 mb from the same time a year ago. Nonetheless, this was 36 mb lower than the latest five-year average and 45 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial stocks fell m-o-m by 0.6 days in March to stand at 61.7 days. This is 4.1 days above the March 2022 level, but 3.2 days less than the latest five-year average and 0.8 days lower than the 2015–2019 average.
Demand for OPEC crude in 2022 remains unchanged from last month’s assessment at 28.4 mb/d. This is around 0.5 mb/d higher than in 2021. Demand for OPEC crude in 2023 also remains unchanged from the previous assessment to stand at 29.3 mb/d. This is around 0.8 mb/d higher than in 2022.